If a Subsidiary's Functional Currency Is Not the Local Currency

question 38

Multiple Choice

If a subsidiary's functional currency is not the local currency in which it operates, but the parent's reporting currency:

• A)​the foreign subsidiary's translated financial statements are identical to the statements that would have resulted if the transactions had been recorded in dollars.
• B)​the translation adjustment is recorded as a component of other comprehensive income.
• C)​there is no indication that exchange rate changes will impact the subsidiary's or the parent's cash flows or equity.
• D)​None of the above is correct.

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Definitions:

Tissue Layer

A grouping of similar cells and their extracellular matrix that together perform specific functions within the body.

Amygdala

A region of the brain within the temporal lobe, involved in emotion regulation, memory processing, and decision-making.

Emotional Changes

Alterations in one's mood or emotional state, which can be influenced by various factors including psychological, physiological, and environmental.

Temperature Regulation

The physiological and behavioral processes by which an organism maintains its body temperature within an optimal range.