IQ Has a Wholly Owned Subsidiary in China

question 32

Multiple Choice

IQ has a wholly owned subsidiary in China. This subsidiary is dependent on IQ for financing and sales. How should foreign exchange gains on translation of the subsidiary's statements to Canadian dollars be reported on IQ's consolidated financial statements?

• A)Gains should be credited directly to shareholders' equity.
• B)Gains should be reported on the balance sheet as deferred credits and amortized in a systematic and rational manner.
• C)Gains from current monetary assets should be credited to income, and any gains from long-term nonmonetary assets should be deferred and amortized.
• D)Gains from current monetary assets and any gains from long-term monetary assets should be credited to income.

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Definitions:

Private Tort Actions

Legal proceedings initiated by individuals seeking compensation for harm or injury caused by another's wrongful act or negligence.

Environmental Damage

Harm caused to the natural environment due to human activities or natural disasters.

NAAQS

The National Ambient Air Quality Standards, regulations that establish allowable concentration levels of pollutants in the air in the United States.

SIP

An acronym that can refer to several concepts, including Systematic Investment Plan, which allows investors to contribute small amounts periodically into a mutual fund.