A Foreign Entity Is a Subsidiary of a U

question 5

Multiple Choice

A foreign entity is a subsidiary of a U.S.parent company and has always used the current rate method to translate its foreign financial statements on behalf of its parent company.Which one of the following statements is false?

• A)The U.S.dollar is the functional currency of this company.
• B)Changes in exchange rates between the subsidiary's country and the parent's country are not expected to affect the foreign entity's cash flows.
• C)Translation adjustments are shown in stockholders' equity as increases or decreases in other comprehensive income.
• D)Translation adjustments are not shown on the income statement.

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Definitions:

Beverage

A drinkable liquid that is not water, often consumed for nourishment, refreshment, or pleasure.

Soft Drink

A non-alcoholic, flavored beverage that is typically carbonated.

Referent

The concrete object or specific thing that a word or phrase identifies or denotes.

Singer

An individual who performs vocally, using their voice to produce musical sounds and harmonies.