Changes in the Functional Currency of a Subsidiary

question 12

Multiple Choice

Changes in the functional currency of a subsidiary

• A)​are not permitted.
• B)​are accounted for retroactively.
• C)​are accounted for prospectively.
• D)​are reported as extraordinary items.

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Definitions:

Variable Costing

An accounting method that only includes variable production costs—costs that change with production volume—in the cost of goods sold.

Fixed Costs

Expenses that do not change with the level of goods or services produced by a business within a certain range of activity.

Cost of Goods Manufactured

The total production cost of goods completed during a specific period, including materials, labor, and overhead.

Variable Costing

An accounting method that considers only variable costs as product costs and treats fixed costs as period costs.