If the assets of a foreign operation exceed its liabilities,and the value of the functional currency (for example the Euro)falls relative to the currency of the foreign operations,there will be:
A)a credit to the 'foreign currency translation reserve' in the consolidated financial statements.
B)a debit to the 'foreign currency translation reserve' in the consolidated financial statements.
C)a credit to 'foreign currency translation revenue' in the consolidated financial statements.
D)a debit to the 'foreign currency translation expense' in the consolidated financial statements.

Question

Quizplus · Accepted Answer

When assets exceed liabilities and the functional currency falls relative to the currency of the foreign operation, there is a gain in the value of the foreign currency. This gain will be recorded as a credit to the 'foreign currency translation reserve' in the consolidated financial statements.

If the Assets of a Foreign Operation Exceed Its Liabilities,and