Under the foreign currency unit of measure approach, an increase in the direct exchange rate always results in an adverse reporting result when the parent has a positive balance in its Investment in Subsidiary account.

Question

Quizplus · Accepted Answer

Under the foreign currency unit of measure approach, an increase in the direct exchange rate does not always result in an adverse reporting result when the parent has a positive balance in its Investment in Subsidiary account. The effect depends on the nature of the subsidiary's net assets and the direction of the exchange rate change relative to the parent's reporting currency.

Under the Foreign Currency Unit of Measure Approach, an Increase