If the British Subsidiary of a European Firm Has Net

question 6

Multiple Choice

If the British subsidiary of a European firm has net exposed assets of £125,000,and the pound increases in value from €1.40/£ to €1.44/£,the European firm has a translation:

• A) gain of €5,000.
• B) loss of €5,000.
• C) gain of £5,000.
• D) loss of £5,000.

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Definitions:

Taxable

Refers to income or transactions that are subject to tax by federal, state, or local taxing authorities.

Premiums

Payments made periodically to an insurance company by policyholders for coverage or to maintain a policy.

Income Recognition

The accounting principle that income should be reported in the fiscal period it is earned, regardless of when it is received.

Property

Items or assets owned by an individual or entity, which can include tangible objects like land or personal items, as well as intangible rights.