As part of the consolidation process for a partially-held foreign subsidiary, the elimination entry to distribute the excess of cost over book value will include a credit to Cumulative Translation Adjustment-Parent
A)for the amount of excess attributable to identifiable net assets multiplied by the difference between historical and current exchange rates
B)for the amount of excess attributable to identifiable net assets multiplied by the difference between average and current exchange rates
C)for the Parent's portion of the excess attributable to identifiable net assets multiplied by the difference between historical and current exchange rates
D)for the Parent's portion of the excess attributable to identifiable net assets multiplied by the difference between average and current exchange rates

Question

As part of the consolidation process for a partially-held foreign subsidiary, the elimination entry to distribute the excess of cost over book value will include a credit to Cumulative Translation Adjustment-Parent
A)​for the amount of excess attributable to identifiable net assets multiplied by the difference between historical and current exchange rates
B)​for the amount of excess attributable to identifiable net assets multiplied by the difference between average and current exchange rates
C)​for the Parent's portion of the excess attributable to identifiable net assets multiplied by the difference between historical and current exchange rates
D)​for the Parent's portion of the excess attributable to identifiable net assets multiplied by the difference between average and current exchange rates

Quizplus · Accepted Answer

The Cumulative Translation Adjustment-Parent (CTA-Parent) is used to record the translation adjustments that result from the consolidation of a foreign subsidiary. In the elimination entry to distribute the excess of cost over book value, the credit to CTA-Parent will be for the Parent's portion of the excess attributable to identifiable net assets multiplied by the difference between historical and current exchange rates. This is because the excess is attributed to the identifiable net assets of the subsidiary, and the Parent's portion of the excess will relate to its investment in the subsidiary. The difference between historical and current exchange rates is used to reflect changes in the value of the subsidiary's net assets over time, which are then translated into the Parent's reporting currency.

As Part of the Consolidation Process for a Partially-Held Foreign