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.

---

Definitions:

Bipolar Disorder

A mental health condition marked by extreme mood swings that include emotional highs (mania or hypomania) and lows (depression).

Dodo Bird Verdict

A metaphor stemming from Alice in Wonderland and used in psychology to suggest that different forms of therapy are equally effective.

Psychotherapy

A treatment method for mental health conditions involving talking with a mental health professional to explore thoughts, feelings, and behaviors to achieve desired change.

Hostile Attitude

Exhibiting aggression or animosity towards others or towards specific ideas.