A Company Has a Foreign-Currency Transaction Gain of $500 and a Foreign-Currency

question 33

Multiple Choice

A company has a foreign-currency transaction gain of $500 and a foreign-currency transaction loss of $9500. How is this information reported on the income statement?

• A)Other Losses: Foreign-Currency Transaction Loss $9500 and Other Gains: Foreign-Currency Transaction Gain $500
• B)Other Losses: Foreign-Currency Transaction Loss, net $9000
• C)Other Comprehensive Loss: Foreign-Currency Transaction Loss $9500 and Other Comprehensive Income: Foreign-Currency Transaction Gain $500
• D)Other Comprehensive Loss: Foreign-Currency Transaction Loss, net $9000

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Definitions:

Functional Currency

The currency of the primary economic environment in which the company predominantly generates and expends cash.

Historical Rates

Exchange rates used for the conversion of items on the financial statements that have remained unchanged from past to present.

Foreign Subsidiary

A company owned or controlled by another company, the parent company, that is based in a different country than the subsidiary.

Functional Currency

The functional currency is the main currency used by a business or economic entity, reflecting the primary economic environment in which it operates.