XYZ Corporation issued convertible bonds that allow bondholders to convert their bonds into common shares of the company at a predetermined conversion ratio. Discuss how these convertible bonds should be recorded and accounted for on the company's balance sheet, income statement, and equity section, including the impact of any changes in the fair value of the conversion option.

Question 4:

A multinational corporation operates in multiple countries and uses different currencies for its subsidiaries. Explain how the company should handle foreign currency translation, including the determination of the functional currency for each subsidiary, the method of translation (e.g., current rate method or temporal method), and the treatment of translation gains or losses in the consolidated financial statements.