The functional currency of DeZoort, Inc.’s British subsidiary is the British pound. DeZoort bor¬ rowed pounds as a partial hedge of its investment in the subsidiary. In preparing consolidated finan¬ cial statements, DeZoort’s negative translation adjustment on its investment in the subsidiary exceeded its foreign exchange gain on its borrowing. How should DeZoort’s report the effects ofthe negative translation adjustment and foreign exchange gain in its consolidated financial statements? LO6

a. Report the translation adjustment in Other Comprehensive Income on the balance sheet and the foreign exchange gain in the income statement.

b. Report the translation adjustment in the income statement and defer the foreign exchange gain in Other Comprehensive Income on the balance sheet.

c. Report the translation adjustment less the foreign exchange gain in Other Comprehensive Income on the balance sheet.

d. Report the translation adjustment less the foreign exchange gain in the income statement.