The Translation Adjustment from Translating a Foreign Subsidiary's Financial Statements

question 93

Multiple Choice

The translation adjustment from translating a foreign subsidiary's financial statements should be shown as

• A)an asset or liability (depending on the balance)on the consolidated balance sheet.
• B)a revenue or expense (depending on the balance)on the consolidated income statement.
• C)a component of stockholders' equity on the consolidated balance sheet.
• D)a component of cash flows from financing activities on the consolidated statement of cash flows.
• E)an element of the notes which accompany the consolidated financial statements.

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Definitions:

Opportunity Cost

The cost of foregoing the next best alternative when making a decision, highlighting the trade-offs involved.

Interest

The cost of borrowing money, typically expressed as a percentage of the amount borrowed, paid by the borrower to the lender for the use of their funds.

Expected Profit Rate

The forecasted return on investment, predicting the percentage of profit relative to costs.

Investment

The allocation of resources or capital to create profit in the future.