Company X has a 100% owned foreign subsidiary that has a functional currency other than Company X's reporting currency. The cumulative translation adjustment in Company X's consolidated financial statements relating to this subsidiary is $15,000,000 credit balance. Company X enters into a transaction whereby it sells some of the equity of the subsidiary to third parties resulting in the dilution of its ownership in the foreign subsidiary to 80% but it retains control of the subsidiary. What is the amount of the cumulative translation adjustment relating to this subsidiary that is included in net income upon the consummation of this change in interest transaction? $15 million credit balance $3 million credit balance $12 million credit balance zero
Question 19
Company X has a 100% owned foreign subsidiary that has a functional currency other than Company X's reporting currency. The cumulative translation adjustment in Company X's consolidated financial statements relating to this subsidiary is $15,000,000 credit balance. Company X enters into a transaction whereby it sells some of the equity of the subsidiary to third parties resulting in the dilution of its ownership in the foreign subsidiary to 80% but it retains control of the subsidiary. What is the amount of the cumulative translation adjustment relating to this subsidiary that is included in net income upon the consummation of this change in interest transaction?
|
$15 million credit balance |
||
|
$3 million credit balance |
||
|
$12 million credit balance |
||
|
zero |
Step by step
Solved in 2 steps
