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:

Interest Expense

The cost incurred by an entity for borrowed funds over a period, included as part of its financial statements.

Other Comprehensive Income

Income that is not included in net income and includes items like foreign currency translation adjustments and unrealized gains or losses on investments.

Discontinued Operations

Components of a business, such as divisions or subsidiaries, that have been sold or otherwise disposed of, or are held for sale.

Selling and Administrative Expenses

Combined costs associated with the selling of products or services and the management of the company.