When may the translation adjustment resulting from translating financial statements using the current or functional method be recognized in income?
A)When there is an accumulated other comprehensive deficit that exceeds retained earnings.
B)When the parent disposes of its interest in the subsidiary.
C)When the functional currency changes to the reporting currency.
D)None of the above is correct.

Question

When may the translation adjustment resulting from translating financial statements using the current or functional method be recognized in income?
A)​When there is an accumulated other comprehensive deficit that exceeds retained earnings.
B)​When the parent disposes of its interest in the subsidiary.
C)​When the functional currency changes to the reporting currency.
D)​None of the above is correct.

Quizplus · Accepted Answer

The translation adjustment resulting from translating financial statements using the current or functional method is recognized in income when the parent disposes of its interest in the subsidiary. This is because the cumulative translation adjustments are realized upon disposal, affecting the gain or loss on the sale of the subsidiary.

When May the Translation Adjustment Resulting from Translating Financial Statements