A Parent Entity Has Recognised an Increase of $50 000

question 6

Multiple Choice

A parent entity has recognised an increase of $50 000 in a Loan Receivable from a foreign subsidiary as a result of a change in exchange rates. On consolidation the following adjustment is necessary:

• A) \(\begin{array} { l c c }
• \text { DR } & \text { Exchange gain } & \$ 50,000 \\
• \text { CR } & \text { Foreign currency translation reserve } & \$ 50,000 ;
• \end{array}\)
• B) \(\begin{array} { l c c c }
• \text { DR } & \text { Exchange gain } & \$ 50,000 & \\
• \text { CR } & \text { Loan receivable } & & \$ 50,000 ;
• \end{array}\)
• C) \(\begin{array} { l c c c }
• \text { DR } & \text { Loan receivable } & \$ 50,000 & \\
• \text { CR } & \text { Foreign currency translation reserve } & \$ 50,000 ;
• \end{array}\)
• D) \(\begin{array} { l c c c }
• \text { DR } & \text { Foreign currency translation reserve } & \$ 50,000 & \\
• \text { CR } & \text { Exchange gain } & \$ 50,000 .
• \end{array}\)

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