The Translation Adjustment That Results from Translating the Financial Statements

question 6

Multiple Choice

The translation adjustment that results from translating the financial statements of a foreign subsidiary using the current rate method should be:

• A) included as a separate item in the stockholders' equity section of the balance sheet.
• B) included in the determination of net income for the period it occurs.
• C) deferred and amortized over a period not to exceed forty years.
• D) deferred until a subsequent year when a loss occurs and offset against that loss.

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Definitions:

Arbitrator

A neutral third party officially assigned to settle a dispute.

Legally Binding

A term used to describe agreements or contracts that are enforceable by law.

Intellectual Property

Legal rights conferred to the creations of the mind, such as inventions, literary and artistic works, designs, and symbols used in commerce.

Affect-based

Relating to, influenced by, or arising from emotions or feelings rather than rational thought or logic.