If a Subsidiary's Functional Currency Is Not the Local Currency

question 38

Multiple Choice

If a subsidiary's functional currency is not the local currency in which it operates, but the parent's reporting currency:

• A)​the foreign subsidiary's translated financial statements are identical to the statements that would have resulted if the transactions had been recorded in dollars.
• B)​the translation adjustment is recorded as a component of other comprehensive income.
• C)​there is no indication that exchange rate changes will impact the subsidiary's or the parent's cash flows or equity.
• D)​None of the above is correct.

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