If the Functional Currency of a Foreign Subsidiary Is the Currency

question 19

Multiple Choice

If the functional currency of a foreign subsidiary is the currency of the country where the subsidiary is located, the translation method that should be selected is the

• A) temporal method
• B) current rate method
• C) monetary/nonmonetary method
• D) the current rate method if the rate of inflation is the foreign country is 25% per month.

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Definitions:

Current Price

The present value at which a good or service is sold in the market.

Market Equilibrium

A situation where the quantity of a good or service demanded equals the quantity supplied, leading to a stable market price.

Sunglasses

Eyewear created to shield the eyes from the harmful effects and discomfort caused by intense sunlight and high-energy visible light.

Surplus

The situation in which the quantity supplied of a good or service exceeds the quantity demanded at the current price.