ADVANCED FINANCIAL ACCOUNTING IA
ADVANCED FINANCIAL ACCOUNTING IA
12th Edition
ISBN: 9781260545081
Author: Christensen
Publisher: MCG
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Chapter 12, Problem 12.15Q
To determine

Introduction: Translation adjustment is the most common method used and is applied when the local currency is the foreign entity’s functional currency. The subsidiary statement must be translated from its local currency to the parents’ functional currency. To translate the financial statements, the company will use the current rate, which is the exchange rate on balance sheet date, to convert the local currency.

To comment:The use of current exchange rate method of translating a foreign affiliate’s financial statement allows for an assessment of foreign management by the same ratio criteria used to manage the foreign affiliate.

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Chapter 12 Solutions

ADVANCED FINANCIAL ACCOUNTING IA

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