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What Exchange Rate Would Be Used to Translate the Asset

question 90

Essay

What exchange rate would be used to translate the asset and liability account balances of a foreign subsidiary when the local currency is the functional currency? What justification can be given for using this exchange rate?


Definitions:

Distribution System

The methodological way in which a business delivers its goods or services to its customers. This encompasses transportation, warehousing, order fulfillment, and more.

Intermediate Goods

Products that are used in the production of final goods and services, rather than being sold directly to consumers.

Raw Materials

Basic materials that are in their natural, unprocessed form, used as inputs for production in manufacturing, construction, and other industries.

JIT

Just-in-Time is a management strategy that aligns raw-material orders from suppliers directly with production schedules.

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