Note: This Is a Kaplan CPA Review Question

Multiple Choice

Note: This is a Kaplan CPA Review Question
The functional currency of Nash, Inc.'s subsidiary is the French franc. Nash borrowed French francs as a partial hedge of its investment in the subsidiary. In preparing consolidated financial statements, Nash's translation loss on its investment in the subsidiary exceeded its exchange gain on the borrowing. How should the effects of the loss and gain be reported in Nash's consolidated financial statements?

A) The translation loss less the exchange gain is reported separately as other comprehensive income.
B) The translation loss less the exchange gain is reported in the income statement.
C) The translation loss is reported separately in the stockholders' equity section of the balance sheet and the exchange gain is reported in the income statement.
D) The translation loss is reported in the income statement and the exchange gain is reported separately in the stockholders' equity section of the balance sheet.