_____ During 2006, the Swiss franc weakened. Under the current rate method, an unfavorable reporting result occurred as a result of this 2006 exchange rate change. What was the subsidiary's average financial position during 2006?
A) A net monetary asset position.
B) A net monetary liability position.
C) A net investment (net asset) position.
D) A net liability position.

Question

Quizplus · Accepted Answer

Under the current rate method, a weakening of the local currency (Swiss franc) results in an unfavorable translation effect if the subsidiary has a net investment (net asset) position, as the value of the net assets decreases when translated into the parent company's currency.

_____ During 2006, the Swiss Franc Weakened