7. Gains from remeasuring a foreign subsidiary’s financial statements from the l

Question

7. Gains from remeasuring a foreign subsidiary’s financial statements from the local currency, which is not the functional currency, into the parent company’s currency should be reported as a(n)

A: Deferred foreign exchange gain.
B: "Other comprehensive income" and as a separate component of stockholders’ equity.
C: Extraordinary item, net of income taxes.
D: Part of continuing operations.

8. If one Canadian dollar can be exchanged for 90 cents of United States money, what fraction should be used to compute the indirect quotation of the exchange rate expressed in Canadian dollars?

A: 1.10/1
B: 1/1.10
C: 1/.90
D: .90/1

Explanation / Answer

7 Gains from remeasuring a foreign subsidiary’s financial statements from the local currency, which is not the functional currency should be reported as Part of continuing operations. Option D is correct 8 Indirect quotation of the exchange rate = 1/0.90 Option C is correct

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