In Translating a Foreign Subsidiary's Financial Statements, What Exchange Rate

question 4

Essay

In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses?

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Definitions:

Financial Statement

A formal record of the financial activities and position of a business, person, or other entity, typically including the balance sheet, income statement, and cash flow statement.

Balance Sheet

A report detailing a business's assets, liabilities, and equity held by shareholders at a certain moment.

Revenue

The total amount of money received by a company from its business activities, such as sales of goods or services, before any expenses are subtracted.

Expense Accounts

Accounts used to record transactions relating to expenses incurred by a business, such as costs for materials, utilities, and salaries.