When Using the Current Rate Method, the Translation Adjustment from Translating

question 5

Multiple Choice

When using the current rate method, the translation adjustment from translating a foreign subsidiary's financial statements should be shown as

• A) An asset or liability (depending on the balance) in the consolidated balance sheet.
• B) A revenue or expense (depending on the balance) in the consolidated income statement.
• C) A component of stockholders' equity in the consolidated balance sheet.
• D) A component of cash flows from financing activities in the consolidated statement of cash flows.
• E) An element of the notes which accompany the consolidated financial statements.

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Definitions:

Accounts Payable

This is the amount of money that a company owes to its suppliers or creditors as a result of purchasing goods or services on credit.

Retention Ratio

The segment of net earnings kept by a corporation instead of being paid out to its shareholders in the form of dividends.

Net Income

It represents the total earnings of a company after subtracting all expenses, taxes, and losses from the total revenue.

Cash Dividends

Payments made by a company out of its earnings to its shareholders, typically in the form of cash, representing a portion of the company's profits.