Cho Co ,A Public Canadian Corporation Has a Subsidiary in South

question 6

Multiple Choice

Cho Co. ,a public Canadian corporation has a subsidiary in South Africa that supplies half of the components that Cho needs for its plant in Alberta.It has been determined that the functional currency of the foreign operations is the Canadian dollar.Which of the following statements is true?

• A)The exchange gains and losses on the monetary items will be recognized in net income.
• B)The exchange gains and losses on the monetary items will be recognized as other comprehensive income.
• C)The cumulative exchange gains and losses will be shown as a separate component of shareholders' equity.
• D)The exchange gains and losses on nonmonetary items are deferred.

---

Definitions:

Discount Rate

The discount rate is the interest rate used to determine the present value of future cash flows in discounted cash flow analysis.

90-day Note

A short-term debt instrument that matures in 90 days, often used in business for financing or investment purposes.

Interest-bearing Note

A type of promissory note or loan agreement that includes an obligation to pay a fixed or variable interest rate over the term of the loan.

Journal Entry

A record in accounting that represents a transaction in the books of accounts, detailing the financial operations of a business.