Which of the Following Statements About the Current Rate Method

question 39

Multiple Choice

Which of the following statements about the Current Rate method is false?

• A)Translation involves restating the functional currency amounts into the reporting currency.
• B)All assets and liabilities are translated at the current rate.
• C)If the subsidiary maintains their books in their functional currency,the current rate method is used.
• D)The effect of exchange rate changes are reported on the income statement as a foreign exchange gain or loss.

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Definitions:

Fixed Costs

Costs that do not vary with the level of output, such as rent, salaries, and equipment maintenance.

Optimal Level

The most favorable or advantageous point, level, or condition in a process or activity, often involving the maximization of efficiency or profit.

Market Demand

This refers to the total demand for a product or service by all consumers in a particular market.

Competitive Firm

A company that operates in a market where it must compete with other firms for customers, characterized by the inability to control market prices.