Question

In translating a foreign subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities? Multiple Choice The exchange rate in effect when each asset or liability was acquired. The average exchange rate for the current year. A calculated exchange rate based on market value. The exchange rate in effect as of the balance sheet date. The exchange rate in effect at the start of the current year.

Answer 1

The exchange rate in effect as of the balance sheet date.

Step-by-step explanation:

Here some important points to consider while translating a foreign subsidiary's financial statements

• In translating a foreign subsidiary's financial statements, please, do not mess up a functional currency with a presentation currency.

• Every company has just one functional currency, but it can present its financial statements in many presentation currencies.

• While the functional currency depends on the economic environment of a company and its specific operations, the presentation currency is a matter of CHOICE.