You Are Trying to Determine the Functional Currency of a Foreign

question 9

Essay

You are trying to determine the functional currency of a foreign unit. For the following three factors determine what conditions would result in the foreign currency being the functional currency:
a. Sales Prices
b. Financing
c. Relationships between the Parent and the Foreign Unit.

---

Definitions:

Callable Bonds

Bonds that can be redeemed by the issuer before their maturity date at a specified call price.

Issuing Corporation's Common Stock

The process by which a corporation releases its own shares of stock to the public for the first time or through subsequent offerings.

Long-term Notes

Debt obligations with a maturity of more than one year, used by companies to finance operations or major purchases.

Multiple Lenders

A situation where a borrower has loans or credit lines from more than one lender at the same time.