Acanadian subsidiary of a u. s. parent firm is instructed to bill an export to the parent in u. s. dollars. the canadian subsidiary records the accounts receivable in canadian dollars and notes a profit on the sale of goods. later, when the u. s. parent pays the subsidiary the contracted u. s. dollar amount, the canadian dollar has appreciated 10% against the u. s. dollar. in this example, the canadian subsidiary will record a 61)
a) any gain or loss will be recorded only by the parent firm.
b) since the canadian firm is a u. s. subsidiary neither a gain nor loss will be recorded.
c) 10% foreign exchange loss on the u. s. dollar accounts receivable.
d) 10% foreign exchange gain on the u. s. dollar accounts receivable.
gains and losses are "realized" whereas
gains and losses are only "paper."
a) transaction; translation
b) translation; operating