The functional currency of Nash, Inc.’s subsidiary is the Swiss franc.  Nash borrowed Swiss francs as a partial hedge of its investment in the subsidiary.  In preparing consolidated financial statements, Nash’s translation loss on its investment in the subsidiary exceeded its exchange gain on the borrowing.  How should the effects of the loss and gain be reported in Nash’s consolidated financial statements?

Answers

A: The translation loss less the exchange gain is reported as "other comprehensive income" under one of three alternatives and "accumulated other comprehensive income" in the stockholders’ equity section of the balance sheet.
B: The translation loss less the exchange gain is reported in the income statement.
C: The translation loss is reported separately as "other comprehensive income" and in the stockholders’ equity section of the balance sheet and the exchange gain is reported in the income statement.
D: The translation loss is reported in the income statement and the exchange gain is reported as "other comprehensive income" and in the stockholders’ equity section of the balance sheet.