Note: This Is a Kaplan CPA Review Question

question 61

Multiple Choice

Note: This is a Kaplan CPA Review Question
The functional currency of Nash, Inc.'s subsidiary is the French franc. Nash borrowed French francs as a partial hedge of its investment in the subsidiary. In preparing consolidated financial statements, Nash's translation loss on its investment in the subsidiary exceeded its exchange gain on the borrowing. How should the effects of the loss and gain be reported in Nash's consolidated financial statements?

• A) The translation loss less the exchange gain is reported separately as other comprehensive income.
• B) The translation loss less the exchange gain is reported in the income statement.
• C) The translation loss is reported separately in the stockholders' equity section of the balance sheet and the exchange gain is reported in the income statement.
• D) The translation loss is reported in the income statement and the exchange gain is reported separately in the stockholders' equity section of the balance sheet.

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Definitions:

Unemployment Benefits

Payments made by the government to unemployed individuals who meet certain eligibility requirements.

Department of Agriculture

A government department responsible for developing and executing federal policies on farming, agriculture, forestry, and food, aiming to meet the needs of farmers and ensure food safety.

Official Poverty Line

The officially established income level that distinguishes the poor from the nonpoor. It is set at three times the cost of the Department of Agriculture’s minimum food budget.

After-Tax Income

Before-tax income minus taxes paid.