In Cases of Operations Located in Highly Inflationary Economies

question 41

Multiple Choice

In cases of operations located in highly inflationary economies:

• A) The reporting currency of the U.S. parent-the U.S. dollar-should be used as the foreign entity's functional currency.
• B) The foreign currency should be used as the functional currency with a footnote to the financials displaying what the earnings would have been using the U.S. dollar as the functional currency.
• C) The foreign currency should be used as the functional currency with a single line item-foreign translation-reporting the adjustment using the U.S. dollar as the functional currency.
• D) None of these.

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Definitions:

Pessimism

A tendency to see the worst aspect of things or believe that the worst will happen; a lack of hope or confidence in the future.

Interpersonal Conflict

A situation in which individuals or groups have incompatible goals, needs, or interests, leading to disagreement or dispute.

Withdrawal Mechanism

A term often used in psychology and organizational behavior to describe the process by which individuals distance themselves from a situation, task, or social setting as a coping strategy.

Daydreaming

The act of engaging in spontaneous, fanciful thoughts or fantasies while awake, often as a form of mental escape from routine or stress.