The holder of a liability denominated in a foreign currency would experience _____ when its functional currency appreciates against that foreign currency:
A)an economic gain
B)an economic loss
C)no change in value for that asset
D)only an accounting loss

Question

Quizplus · Accepted Answer

When the functional currency appreciates against the foreign currency in which a liability is denominated, the amount of functional currency needed to settle the liability decreases, resulting in an economic gain for the holder of the liability.

The Holder of a Liability Denominated in a Foreign Currency