When a Parent Entity Has an Overseas Subsidiary the First

question 23

Multiple Choice

When a parent entity has an overseas subsidiary the first task before consolidation is to:

• A) translate the financial statements from the functional currency to the presentation currency.
• B) translate the financial statements from the presentation currency to the functional currency.
• C) determine the functional currency of the overseas subsidiary.
• D) determine the functional currency of the parent entity.

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Definitions:

Budgeted Fixed Manufacturing Overhead

The estimated total fixed costs required for the manufacturing process, planned in advance for a specific period.

Materials Price Variance

The difference between the actual cost of materials used in production and the budgeted or standard cost, indicating how effectively a company controls its material costs.

Standard Costs

Predetermined costs for materials, labor, and overhead that are used for budgeting and cost control purposes.

Raw Materials

The unprocessed natural materials or substances used in the initial stages of production or manufacturing.