Under the Temporal Method,how Is an Exchange Gain Arising from the Long-Term

question 19

Multiple Choice

Under the temporal method,how is an exchange gain arising from the long-term debt of a foreign subsidiary,accounted for?

• A)Deferred until the date of maturity
• B)Recognized as a component of current income
• C)As part of the cumulative translation adjustment
• D)Deferred and amortized over the period to maturity

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Definitions:

Doubtful Accounts

Doubtful accounts are receivables that a company believes might become uncollectible in the future, leading to their designation as a bad debt expense.

Sales Discounts

Reductions to the selling price of goods or services, offered to customers to encourage prompt payment or to incentivize bulk purchases.

Accrual Basis

An accounting method where revenue and expenses are recognized when they are earned or incurred, regardless of when cash transactions occur.

Cash Basis

Cash basis accounting is an accounting method where revenue and expenses are recorded only when cash is received or paid, respectively.