Question

Nichols Company owns 90% of the capital stock of a foreign subsidiary located in Ireland. As a result of translating the subsidiary's accounts, a debit of $160,000 was needed in the translation adjustments account so that the foreign subsidiary's debits and credits were equal in U.S. dollars. How should Nichols report its translation adjustments on its consolidated financial statements?

Answer 1

Nichols should report the amount of $144,000 reduction in consolidated comprehensive net income

Step-by-step explanation:

Based on the information given we were told that Company owns 90% of the capital stock of a foreign subsidiary ln which a Debit of the amount of $160,000 was needed in the translation adjustments account.

Based on the above the next step is to find the 90% of the amount of $160,000 which will give us the amount of $144,000, this means that Nichols should report its translation adjustments on its consolidated financial statements as a $144,000 reduction in consolidated comprehensive net income.