_____ On 12/31/06, a Danish subsidiary accrued a litigation liability of 100,000 krones ($40,000 when translated at the current rate at 12/31/06), even though the probability of payment is remote. The outcome is not expected to be determined until 2007. The worksheet entry required at 12/31/07 (not 12/31/06) will result in which of the following (assuming no change in the exchange rate during 2007)?
A) Debit Retained Earnings 100,000 krones.
B) Credit Retained Earning 100,000 krones.
C) Debit Retained Earnings $40,000.
D) Credit Retained Earnings $40,000.
E) Credit Litigation Expense for 100,000 krones or $40,000.

Question

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The Answer of _____ On 12/31/06, a Danish subsidiary accrued a litigation liability of 100,000 krones ($40,000 when translated at the current rate at 12/31/06), even though the probability of payment is remote. The outcome is not expected to be determined until 2007. The worksheet entry required at 12/31/07 (not 12/31/06) will result in which of the following (assuming no change in the exchange rate during 2007)?
A) Debit Retained Earnings 100,000 krones.
B) Credit Retained Earning 100,000 krones.
C) Debit Retained Earnings $40,000.
D) Credit Retained Earnings $40,000.
E) Credit Litigation Expense for 100,000 krones or $40,000.

_____ on 12/31/06, a Danish Subsidiary Accrued a Litigation Liability