A foreign subsidiary of Thun Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidiary is the yuan. The inventory was acquired for 100,000 yuan when the exchange rate was $0.16 = 1 yuan. Consolidated statements are to be produced, and the current exchange rate is $0.12 = 1 yuan. Which of the following statements is true for the consolidated financial statements? Choose the correct.a. A remeasurement gain must be reported.b. A positive translation adjustment must be reported.c. A negative translation adjustment must be reported.d. A remeasurement loss must be reported.
A foreign subsidiary of Thun Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidiary is the yuan. The inventory was acquired for 100,000 yuan when the exchange rate was $0.16 = 1 yuan. Consolidated statements are to be produced, and the current exchange rate is $0.12 = 1 yuan. Which of the following statements is true for the consolidated financial statements? Choose the correct.a. A remeasurement gain must be reported.b. A positive translation adjustment must be reported.c. A negative translation adjustment must be reported.d. A remeasurement loss must be reported.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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A foreign subsidiary of Thun Corporation has one asset (inventory) and no liabilities. The functional currency for this subsidiary is the yuan. The inventory was acquired for 100,000 yuan when the exchange rate was $0.16 = 1 yuan. Consolidated statements are to be produced, and the current exchange rate is $0.12 = 1 yuan. Which of the following statements is true for the consolidated financial statements? Choose the correct.
a. A remeasurement gain must be reported.
b. A positive translation adjustment must be reported.
c. A negative translation adjustment must be reported.
d. A remeasurement loss must be reported.
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