The effect of an exchange-rate change on the financial statements of a foreign subsidiary ________.
A) generally results in a foreign exchange gain
B) generally results in a foreign exchange loss
C) is neither a gain nor a loss because of accounting rules
D) is either a net gain or a net loss

Question

Quizplus · Accepted Answer

An exchange-rate change can result in either a foreign exchange gain or a loss depending on the direction of the change and the subsidiary's functional currency. Thus, the effect is either a net gain or a net loss.

The Effect of an Exchange-Rate Change on the Financial Statements