A Subsidiary's Functional Currency Is the Local Currency That Has

question 9

Multiple Choice

A subsidiary's functional currency is the local currency that has not experienced significant inflation. The appropriate exchange rate for translating the depreciation on plant assets in the income statement of the foreign subsidiary is the

• A) Exit exchange rate
• B) Historical exchange rate
• C) Weighted average exchange rate over the economic life of each plant asset
• D) Weighted average exchange rate for the current year

---

Definitions:

Shortage

A situation where the demand for a product exceeds its supply in the market.

Quantity Demanded

The entire quantity of a product or service that buyers are prepared and capable of buying at a certain price within a defined timeframe.

Interest Rates

The cost of borrowing money or the rate of return on investments, typically expressed as a percentage of the principal.

Loanable Funds

The money available for lending and borrowing in the financial markets.