If a USParent Loans Funds on a Long-Term Basis to a Subsidiary

question 33

Multiple Choice

If a US.parent loans funds on a long-term basis to a subsidiary denominated in the subsidiary's foreign currency, the effect of rate changes on the loan:

• A)​are considered foreign currency transaction gains and losses and are included in income.
• B)​are first offset against other comprehensive income resulting from translation of the foreign entity's financial statements with any excess being included in income.
• C)​are included in other comprehensive income because the loan is considered a long-term investment transaction.
• D)​are first offset against any foreign currency transaction gains or losses resulting from other intercompany transactions, with any excess being included in other comprehensive income.

---

Definitions:

Decision Making

The cognitive process of selecting a course of action from among multiple alternatives, based on preferences, values, and the assessment of possible outcomes.

Shared Mental Model

A cognitive framework shared among members of a team or group that facilitates common understanding and coordination.

Primed Goal Orientation

A psychological state induced by external cues that activates a specific goal-driven behavior or mindset in an individual.

Cross-cueing

A cognitive strategy in which information from one source is used to retrieve or interpret information from another, often used in learning and memory.