When the Functional Currency Is Identified as the U

question 29

Multiple Choice

When the functional currency is identified as the U.S. dollar, land purchased by a foreign subsidiary after the controlling interest was acquired by the parent company should be translated using the:

• A) historical rate in effect when the land was purchased.
• B) current rate in effect at the balance sheet date.
• C) forward rate.
• D) average exchange rate for the current period.

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Definitions:

Principal

The initial amount of money borrowed or invested, excluding any interest or dividends.

Installments

Regular, often monthly, payments made towards settling a debt or purchasing a product over time.

Callable Bond

A type of bond that gives the issuer the right to repay the bond before its maturity date, usually at a specified call price.

Redeem

The act of exchanging something, such as a coupon or financial securities, for a specific value or service.