If a US-Based MNE Translates Its German Subsidiary's Financial Statements from Euros

question 78

Multiple Choice

If a U.S.-based MNE translates its German subsidiary's financial statements from euros into dollars using the current-rate method, how would it recognize translation gains and losses?

• A)Gains and losses would be taken to the income statement.
• B)Gains and losses would be recognized on the balance sheet in owners' equity.
• C)Gains and losses are not recognized since the financial statements are in dollars.
• D)There are transaction gains and losses but not translation gains and losses.

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Definitions:

Selection Bias

A statistical bias that occurs when the sample is not representative of the population being studied, leading to skewed and possibly inaccurate outcomes.

Survivor Bias

Survivor bias exists when a sample includes only observations that have remained in the sample over time making that sample unrepresentative of the broader population.

Selection Bias

A systematic error made in choosing individuals or groups to participate in a study, leading to non-random sampling.

Economic Research

The systematic study of the economy or economic phenomena, involving the collection and analysis of data to enhance understanding of economic processes.