_____ Povax Has a Long-Term Intercompany Receivable Resulting from a Loan

Multiple Choice

_____ Povax has a long-term intercompany receivable resulting from a loan made to a foreign subsidiary several years ago. No due date is specified inasmuch as settlement is not planned in the foreseeable future. The receivable is denominated in euros. During 2006, the U.S. dollar strengthened. Povax uses the temporal method of translation. At 12/31/06, Povax should

A) Adjust the intercompany receivable downward and debit OCI-Translation Adjustment
B) Adjust the intercompany receivable downward and debit FX Transaction Loss.
C) Adjust the intercompany receivable downward and debit Investment in Subsidiary.
D) Make no adjustment to the intercompany receivable account.
E) None of the above.