When a US Company Owns a Foreign Subsidiary, a Foreign-Currency Translation Adjustment

question 121

True/False

When a U.S. company owns a foreign subsidiary, a foreign-currency translation adjustment is calculated using the subsidiary's balance sheet.

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Definitions:

Economic Efficiency

A state where resources are allocated in a way that maximizes the production of goods and services without wasting any resources.

External Benefit

A benefit that results from an activity but affects uninvolved third parties who did not choose to incur that effect, often leading to market inefficiencies.

Inefficient Equilibrium

A state in a market where resources are not allocated optimally, leading to wastage or loss of potential gain.