Question

The gain or loss on the effective portion of a U.S. parent company's hedge of a net investment in a foreign entity should be treated as:

Answer 1

other comprehensive income.

Step-by-step explanation:

Other comprehensive income is a term that describes a form of income that is yet to be gotten or realized, and it can be any or all of the following: revenues, expenses, gains, and losses.

Hence, in this case, the gain or loss on the effective portion of a U.S. parent company's hedge of a net investment in a foreign entity is considered not yet realized. Therefore it should be treated as Other Comprehensive Income.