The Net Assets of a Foreign Operation at 30 June

question 22

Multiple Choice

The net assets of a foreign operation at 30 June 2005 are constituted as assets of US$400,000 and liabilities of US$250,000. The parent entity purchased the foreign subsidiary on 1 July 2002. Exchange rate information is as follows:

The foreign operation has not traded during the year ended 30 June 2005, so the net assets remained unchanged during the period. What is the parent entity's foreign currency exposure for the year ended 30 June 2005?

• A) Foreign exchange gain $A197,185.
• B) Foreign exchange gain $A20,610.
• C) Foreign exchange gain $A342,310.
• D) Foreign exchange loss $A6,002.
• E) None of the given answers.

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Definitions:

Managerial Accounting

The process of identifying, measuring, analyzing, and interpreting accounting information to help managers make informed business decisions.

Organization

An entity comprising multiple people, such as a corporation or partnership, formed for a collective goal.

Goal Setting

Goal setting involves defining specific, measurable objectives that a person or organization aims to achieve within a time frame.

Nonmonetary Information

Qualitative or information that cannot be easily quantified or expressed in monetary terms.