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:

Business Practices

The methods, strategies, and procedures used by companies to conduct business, interact with customers, and compete in the market.

International Investment Portfolios

Diverse collections of investment assets held across global markets by individuals or institutions to minimize risk and enhance returns.

International Trade

The exchange of goods and services between countries, which can be influenced by government policies, global economic conditions, and trade agreements.

National Union Federations

Umbrella organizations that encompass various unions within a country, coordinating activities and representing a broad spectrum of workers.