Which part of equity reflects the gains or losses from foreign currency translations?

The gains or losses from foreign currency translations are reflected in comprehensive income. This is a key component of the equity section of the balance sheet, encompassing all non-owner changes in equity that are not included in net income. The purpose of comprehensive income is to provide a broader view of a company's financial performance, capturing items that may not be realized or recorded in the traditional income statement.

Currency translation adjustments arise when companies operate in multiple foreign currencies and need to convert their financial statements into their reporting currency. As fluctuations in exchange rates occur, these translation adjustments can create unrealized gains or losses that affect the overall equity without impacting the income statement directly. By including these adjustments in comprehensive income, stakeholders can better understand the financial impact of currency movements on the company’s overall position.

Other components of equity like retained earnings, paid-in capital, and accumulated deficit deal primarily with the company's profits, contributions from owners, or losses carried forward, respectively, but do not specifically account for foreign currency translation adjustments. Therefore, comprehensive income is the correct context for recognizing these gains or losses.