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:

Invested

The act of allocating resources, usually money, with the expectation of generating an income or profit.

Compounded Monthly

Refers to the process where interest is calculated and added to the principal balance on a monthly basis, leading to interest on interest.

Future Value

The future date value of an asset or cash that matches a given sum today.

Equal Amount

A quantity that is the same in value, size, or measure as another.