A U.S. company owns an 80% interest in a company located on Mars. Martian currency is called
A U.S. company owns an 80% interest in a company located on Mars. Martian currency is called the Martian Credit. During the year the parent company sold inventory that had cost $24,000 to the subsidiary on account for $30,000 when the exchange rate was $0.5192. The subsidiary still held one-half of the inventory and had not paid the parent company for the purchase at the end of the fiscal period. The unsettled account is denominated in dollars. The exchange rate at the fiscal year-end was $0.4994.
How is the transaction gain or loss reported in the consolidated financial statements? How would your answer differ if the loan to the foreign subsidiary of a long-term investment nature?