
Introduction:The FASB adopted the concept of the functional currency , which is defined as, the currency of the primary economic environment in which the entity operates; normally that is the currency of the environment in which an entity primarily generates and receives cash. The functional currency is used to differentiate between two types of foreign operations, those that are self-contained and integrated with the parent, for example, a U.S. company may have foreign affiliates in many countries. Each affiliate must be analyzed to determine its individual functional currency.
The methodology for translating the subsidiary’s financial statements into the parent’s reporting currency, for a C based U.S. subsidiary, when parent uses C dollar as its functional currency.

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Chapter 12 Solutions
Advanced Financial Accounting
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