If the functional currency is the Swiss franc, the net result under FASB?52 would be a
A) transaction loss of $40,000 for the U.S. parent
B) transaction gain of $56,383 for the U.S. parent
C) transaction loss of $32,876 for the Swiss subsidiary
D) transaction gain of $3176 for the U.S. parent

Question

Quizplus · Accepted Answer

Since the functional currency is the Swiss franc, the transaction needs to be re-measured using the exchange rate on the transaction date. The transaction amount of CHF 220,000 is equivalent to USD $171,617 (220,000/1.2825). The payment amount of CHF 200,000 is equivalent to USD $155,234 (200,000/1.285). Thus, the net result is a transaction gain of $56,383 for the U.S. parent.

If the Functional Currency Is the Swiss Franc, the Net