When a foreign subsidiary's assets are _______ than its liabilities,if the foreign currency value depreciates for the country in which the foreign subsidiary operates,_______ will occur.
A) greater; currency exchange gains
B) greater; currency exchange losses
C) less; nothing
D) greater; nothing

Question

Quizplus · Accepted Answer

When a foreign subsidiary's assets are greater than its liabilities, if the foreign currency value depreciates for the country in which the foreign subsidiary operates, currency exchange losses will occur. This is because the value of the assets in the foreign currency will decrease, while the liabilities remain the same, leading to a loss in the parent company's consolidated financial statements.

When a Foreign Subsidiary's Assets Are _______ Than Its Liabilities,if