Parentco,Inc

question 10

Multiple Choice

Parentco,Inc.had a negative cumulative translation adjustment of ($250,000) on its balance sheet pertaining to its investment in Subko Ltd at the point in time that Parentco sold its interest in Subko. How must Parentco handle this translation adjustment when it records the sale of Subko?

• A)as an increase in income (gain on disposal)
• B)as a decrease in income (loss on disposal)
• C)The cumulative translation adjustment will not be affected by the sale.
• D)It will be a prior period adjustment to retained earnings.

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Definitions:

Budget Field

A category within a budget, specifying an area of financial activity, such as revenues, expenses, or investments.

Interest Rates

The cost of borrowing money or the return on invested funds, typically expressed as a percentage.

After-Tax Profit

The amount of income left after all taxes have been deducted from the gross income.

Economy

An area of the production, distribution, or trade, and consumption of goods and services by different agents in a given geographical location.