_____ A foreign subsidiary has the foreign currency as its functional currency. The parent enters into an FX forward to hedge its net investment. What will occur or be the accounting treatment?
A) There will always be an offsetting effect.
B) There may or may not be an offsetting effect.
C) Any gain or loss on the forward exchange contract must be recognized currently in earnings.
D) Any gain or loss on the forward exchange contract will be deferred on the parent's books and treated as an adjustment to the Investment in Subsidiary account.
E) None of the above.

Question

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The Answer of _____ A foreign subsidiary has the foreign currency as its functional currency. The parent enters into an FX forward to hedge its net investment. What will occur or be the accounting treatment?
A) There will always be an offsetting effect.
B) There may or may not be an offsetting effect.
C) Any gain or loss on the forward exchange contract must be recognized currently in earnings.
D) Any gain or loss on the forward exchange contract will be deferred on the parent's books and treated as an adjustment to the Investment in Subsidiary account.
E) None of the above.

_____ a Foreign Subsidiary Has the Foreign Currency as Its