In Translating a Foreign Subsidiary's Financial Statements, Which Exchange Rate

question 37

Multiple Choice

In translating a foreign subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities?

• A) The exchange rate in effect when each asset or liability was acquired.
• B) The average exchange rate for the current year.
• C) A calculated exchange rate based on market value.
• D) The exchange rate in effect as of the balance sheet date.
• E) The exchange rate in effect at the start of the current year.

---

Definitions:

Consolidated Worksheet

A tool used in the preparation of consolidated financial statements, enabling the combining of financial information from parent and subsidiary entities.

Adjustments

Modifications made to the accounting records or financial statements to correct errors or to account for transactions not reflected in the initial entries.

Consolidated Net Income

The total profit of a parent company and its subsidiaries after taxes and interest, combined into one financial statement.

Controlling Interest

An ownership interest in a business entity sufficient to provide the power to direct its policies and management.