If a US.parent loans funds on a long-term basis to a subsidiary denominated in the subsidiary's foreign currency, the effect of rate changes on the loan:
A)are considered foreign currency transaction gains and losses and are included in income.
B)are first offset against other comprehensive income resulting from translation of the foreign entity's financial statements with any excess being included in income.
C)are included in other comprehensive income because the loan is considered a long-term investment transaction.
D)are first offset against any foreign currency transaction gains or losses resulting from other intercompany transactions, with any excess being included in other comprehensive income.

Question

If a US.parent loans funds on a long-term basis to a subsidiary denominated in the subsidiary's foreign currency, the effect of rate changes on the loan:
A)​are considered foreign currency transaction gains and losses and are included in income.
B)​are first offset against other comprehensive income resulting from translation of the foreign entity's financial statements with any excess being included in income.
C)​are included in other comprehensive income because the loan is considered a long-term investment transaction.
D)​are first offset against any foreign currency transaction gains or losses resulting from other intercompany transactions, with any excess being included in other comprehensive income.

Quizplus · Accepted Answer

The Answer of If a US.parent loans funds on a long-term basis to a subsidiary denominated in the subsidiary's foreign currency, the effect of rate changes on the loan:
A)​are considered foreign currency transaction gains and losses and are included in income.
B)​are first offset against other comprehensive income resulting from translation of the foreign entity's financial statements with any excess being included in income.
C)​are included in other comprehensive income because the loan is considered a long-term investment transaction.
D)​are first offset against any foreign currency transaction gains or losses resulting from other intercompany transactions, with any excess being included in other comprehensive income.

If a USParent Loans Funds on a Long-Term Basis to a Subsidiary