Explanation

Positive translation adjustment occurs when:

• The subsidiary has a net asset balance sheet exposure (assets > liabilities)
• And the foreign currency strengthens against the parent's currency

How it works:

• Net asset exposure means the subsidiary has more assets than liabilities denominated in foreign currency
• When foreign currency strengthens, the value of those net assets increases when converted to parent's currency
• This positive adjustment is recorded in other comprehensive income (cumulative translation adjustment)

Why other options are incorrect:

• Option A: Net asset exposure + foreign currency weakening = negative adjustment
• Option C: Net liability exposure + foreign currency strengthening = negative adjustment

Option B is correct because net asset exposure with strengthening currency creates a positive translation adjustment.