Which of the Following Statements Is Correct

question 20

Multiple Choice

Which of the following statements is correct?

• A) If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), contributed capital must be translated using closing rates.
• B) If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), contributed capital must be translated using average rates.
• C) If an organization is self-sustaining (i.e., the functional currency of the foreign operation is different than the parent), contributed capital must be translated using historical rates.
• D)If an organization is considered an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent), contributed capital must be translated using average rates.

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Definitions:

Perpetuity

A type of financial instrument that provides an infinite stream of interest payments.

Yield

The income return on an investment, such as the interest or dividends received, expressed as an annual percentage of the investment's cost or current market value.

Zero-coupon Bond

A bond that does not pay periodic interest and is sold at a discount to its face value, with the full face value repaid at maturity.

Par Value

The nominal or face value of a bond, share of stock, or other financial instrument, as stated by the issuer.