Question

A Canadian subsidiary of a U.S. parent firm is instructed to bill an export to the parent in U.S. dollars. The Canadian subsidiary records the accounts receivable in Canadian dollars and notes a profit on the sale of goods.​ Later, when the U.S. parent pays the subsidiary the contracted U.S. dollar​ amount, the Canadian dollar has appreciated​ 10% against the U.S. dollar. In this​ example, the Canadian subsidiary will record​ a

Answer 1

Answer:

10% foreign exchange loss on the U.S. dollar accounts receivable

Explanation:

Based on the information provided within the question it can be said that in this example the Canadian subsidiary will record​ a 10% foreign exchange loss on the U.S. dollar accounts receivable. That is because as the Canadian dollar has appreciated​ 10% against the U.S. dollar, it means that it has lost 10% of it's buying power due to its foreign exchange price change, thus resulting in a loss which needs to be recorded.