REFERENCE: Ref.10_05
A subsidiary of Porter Inc. ,a U.S.company,was located in a foreign country.The functional currency of this subsidiary was the stickle (§).The subsidiary acquired inventory on credit on November 1,2008,for §120,000 that was sold on January 17,2009 for §156,000.The subsidiary paid for the inventory on January 31,2009.Currency exchange rates between the dollar and the stickle were as follows:

-How is the disposition of the translated gain or loss reported on the parent company's financial statements?

Question

REFERENCE: Ref.10_05
A subsidiary of Porter Inc. ,a U.S.company,was located in a foreign country.The functional currency of this subsidiary was the stickle (§).The subsidiary acquired inventory on credit on November 1,2008,for §120,000 that was sold on January 17,2009 for §156,000.The subsidiary paid for the inventory on January 31,2009.Currency exchange rates between the dollar and the stickle were as follows:
 
-How is the disposition of the translated gain or loss reported on the parent company's financial statements?

Quizplus · Accepted Answer

The subsidiary's financial statements are translated from the functional currency (stickle) to the reporting currency (dollar) using the exchange rates at the dates of the transactions. The difference between the translated amounts and the original amounts is called a translation gain or loss. Because the subsidiary is a foreign entity, the translation gain or loss is reported in other comprehensive income on the parent company's financial statements. Therefore, the correct choice is D- other comprehensive income.

REFERENCE: Ref.10_05 a Subsidiary of Porter Inc. ,A U.S.company,was Located in a in a Foreign