If the Functional Currency of the Foreign Operation Is the Same

question 59

Multiple Choice

If the functional currency of the foreign operation is the same as the parent's functional currency, which of the following statements is correct?

• A) The foreign operation's financial statements are translated using the functional currency translation (FCT) method.
• B) The foreign operation's financial statements are translated using the presentation currency translation (PCT) method.
• C) The foreign operation is classified as a foreign affiliate.
• D) The investment in the foreign operation is classified as a non-monetary asset.

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Definitions:

Actual Rate

The real interest rate or return on an investment, taking into account inflation.

Interest

The cost of borrowing money or the payment made to a lender by a borrower for the use of money, typically expressed as an annual percentage rate.

Credit Card

A payment card issued to users as a method of payment allowing the cardholder to pay for goods and services based on the holder's promise to pay for them at a later date.

Effective Annual Rate

The interest rate on a loan or financial product restated from the nominal rate as an annual rate, reflecting the effects of compounding.