According to FASB ASC 830, Foreign Currency Matters, Which of the Following

question 33

Multiple Choice

According to FASB ASC 830, Foreign Currency Matters, which of the following conditions would indicate that a foreign subsidiary's functional currency is the foreign currency?

• A) Sales price not affected by changes in exchange rate in the short-run
• B) High volume of intercompany transactions
• C) Sales in the local market not significant
• D) Most of the subsidiary's financing comes from the parent.

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Definitions:

Stated Rate

The interest rate expressed in the terms of a loan or investment agreement, not necessarily reflecting the actual yield.

Effective Rate

The effective rate is the actual interest rate on a loan or financial product, taking into account the compounding of interest, as opposed to the nominal rate.

Debenture Bond

A debenture bond is a type of unsecured loan that is backed only by the general creditworthiness and reputation of the issuer, not by any collateral.

Unsecured Bond

A bond not backed by specific collateral, relying solely on the issuer's creditworthiness for investor confidence.