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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:

Outsourcing

The business practice of hiring a party outside a company to perform services or create goods that traditionally were performed in-house by the company's own employees.

Supply Chain

The network of all the individuals, organizations, resources, activities and technology involved in the creation and sale of a product, from the delivery of source materials from the supplier to the manufacturer, and eventually to the end user.

Ethics

The moral standards expected by a society.

Moral Standards

The principles that govern the behavior of individuals and institutions regarding what is right and wrong.

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