A Company Has Translated Its Foreign Subsidiary's Financial Statements Using

question 3

Multiple Choice

A company has translated its foreign subsidiary's financial statements using the temporal method. What is the accounting treatment for exchange gains and losses arising from previous years?

• A)Reported as equity
• B)Reported in other comprehensive income
• C)Reported in consolidated net income
• D)Included in opening consolidated retained earnings

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Definitions:

Equilibrium

A state where supply and demand are balanced, leading to a stable market condition.

Export

The selling of goods or services produced in one country to buyers in another country.

Import

The process of bringing goods or services into one country from another for the purpose of selling.

Domestic Price

The price at which goods or services are sold within a country's borders, unaffected by import or export tariffs.