In the Process of Consolidating the Translated Financial Accounts of a Foreign

Multiple Choice

In the process of consolidating the translated financial accounts of a foreign operation,what will be the form of the journal entry required to eliminate the foreign currency effect of a purchase of inventory by the subsidiary from the parent entity? Assume that the value of the foreign currency of the foreign operation has increased relative to the reporting currency.

A)
$$\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Foreign currency loss } ( \mathrm { P \& L } ) & \mathrm { X } & \\\hline \mathrm { Cr } & \text { Cost of goods sold } & & \mathrm { X } \\\hline\end{array}$$
B)
$$\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Inventory } & \mathrm { X } & \\\hline \mathrm { Cr } & \text { Foreign currency gain } ( \mathrm { P \& L } ) & & \mathrm { X } \\\hline\end{array}$$
C)
$$\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Inventory } & \mathrm { X } & \\\hline \mathrm { Cr } & \text { Foreign currency translation reserve } & & \mathrm { X } \\\hline\end{array}$$
D)
$$\begin{array} { | l | l | r | r | } \hline \mathrm { Dr } & \text { Foreign currency translation reserve } & \mathrm { X } & \\\hline \mathrm { Cr } & \text { Inventory } & & \mathrm { X } \\\hline\end{array}$$