MCQ The functional currency of a foreign operation is determinedprimarily by ?(a) The parent company's currency(b) The currency that mainly influences sales prices(c) The reporting currency(d) The local country's currency

Step 1: The functional currecny is the currency of the primary economic environment in which the…

Answered: The functional currency of a foreign…

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 14QE

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Determined primarily by?
Which of the following suggests that the foreign entity's functional currency is the parent's currency? a. Intercompany transaction volume is low. b. Debt is serviced through local operations. c. There is an active and primarily local market. d. Sale prices are influenced by international factors.
Explain the concepts of Local Currency, Functional Currency and Presentation Currency with suitable examples Explain the rule for translating the Financial Statements of Foreign Operations from Local Currency to Functional Currency
A). Why do we need to translate the financial statement of foreign operations? B). Explain the concepts of local currency, functional currency and presentation, orrency with example. K C). How is the profit or loss from translating foreign operations' financial statements from local currency to functional currency treated? D) How are the profit and loss from translating foreign ope ions' financial statements from functional currency to presentation currency treated?
what are implications for analysis of financial statements that result from the accounting for foreign currency translation?
Assuming that the functional currency of a foreign subsidiary is the local currency, which of the following accounts would be translated at the current rate on the Balance Sheet date (B/S Rate)? a.Additional Paid-In Capital b.Cost of Goods Sold c.Retained Earnings d.Allowance for Doubtful Accounts
Select the correct definition of indirect exchange rate. O Foreign currency per unit of domestic currency. Domestic currency per unit of foreign currency.
What is meant by spot rate in case of foreign currency transaction?
Accounting for Foreign Currency Transactions: Accounting for foreign currency transactions involves recording and reporting financial transactions denominated in a currency other than the entity's functional currency. Here are the key steps involved in handling such transactions: **1. Identifying Foreign Currency Transactions: Definition: Foreign currency transactions occur when a business entity conducts financial transactions, such as sales, purchases, or investments, in a currency different from its functional currency. Examples: Buying goods from a foreign supplier, selling products to overseas customers, or borrowing funds in a foreign currency. **2. Determining the Functional Currency: Primary Currency: Each business entity designates a functional currency, which is the primary currency used in its day-to-day operations and financial reporting. Factors Considered: Factors such as the location of the entity's primary economic activities, the currency in…

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The functional currency of a foreign operation is determined primarily by ? (a) The parent company's currency (b) The currency that mainly influences sales prices (c) The reporting currency (d) The local country's currency