If the assets of a foreign operation exceed its liabilities,and the value of the Australian dollar falls relative to the currency of the foreign operations,there will be:
A) a credit to the 'foreign currency translation reserve' in the consolidated accounts.
B) a debit to the 'foreign currency translation reserve' in the consolidated accounts.
C) a credit to 'foreign currency translation revenue' in the consolidated accounts.
D) a debit to the 'foreign currency translation expense' in the consolidated accounts.

Question

Quizplus · Accepted Answer

When the value of the Australian dollar falls relative to the currency of the foreign operations, and the assets exceed liabilities, the translation effect increases the Australian dollar value of net assets. This results in a gain that is credited to the 'foreign currency translation reserve' in the consolidated accounts.

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