Functional Currency Is

question 15

Multiple Choice

Functional currency is

• A) the currency of the primary economic environment in which the subsidiary operates and generates cash flows.
• B) the currency of the country where the corporation is incorporated.
• C) the weighted average of the currencies of all foreign subsidiaries.
• D) the currency proscribed by the national laws of the subsidiary's country of incorporation.

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Definitions:

Acquisition

The process by which one company purchases most or all of another company's shares or assets, gaining control over the acquired company.

Consolidated Retained Earnings

The cumulative amount of profits kept by a company after dividends are paid, as reported in consolidated financial statements that merge the accounts of parent and subsidiary entities.

Par Value

The face value of a bond or stock as stated in the corporate charter or on the certificate.

Fair Value

Fair value is the estimated market price of an asset or liability, reflecting the price at which it could be exchanged between willing parties in an arm's length transaction.