Question

Park Co.'s wholly-owned subsidiary, Schnell Corp., maintains its accounting records in German marks. Because all of Schnell's branch offices are in Switzerland, its functional currency is the Swiss franc. Remeasurement of Schnell's 20X1 financial statements resulted in a $7,600 gain, and translation of its financial statements resulted in an $8,100 gain. What amount should Park report as a foreign exchange gain in its income statement for the year ended December 31, 20X1

Answer 1

Answer: $7600

Step-by-step explanation:

The amount that Park should report as a foreign exchange gain in its income statement for the year ended December 31, 20X1 will be $7600.

We should note that when we want to determine the net income for a particular period, the translatation adjustments will not be included. Therefore the $8100 gain won't be included in the calculation. Hence, Park should report only $7600 gain.