Asked by Jackson O'Brien on Jun 21, 2024
Verified
If the functional currency of the foreign operation is the same as the parent's functional currency, which of the following statements is correct?
A) The foreign operation's financial statements are translated using the functional currency translation (FCT) method.
B) The foreign operation's financial statements are translated using the presentation currency translation (PCT) method.
C) The foreign operation is classified as a foreign affiliate.
D) The investment in the foreign operation is classified as a non-monetary asset.
Functional Currency
The primary currency used by a business or unit, reflecting the economic environment in which it primarily operates.
Foreign Operation
A subsidiary, associate, joint venture, or branch of a company that is located in a country different from the one where the parent company operates.
Presentation Currency
The currency in which a company's financial statements are presented.
- Uncover the right translation strategies for varied particulars in financial statements, considering the functional currency.
- Differentiate between the presentation currency translation (PCT) method and the functional currency translation (FCT) method.
Verified Answer
Learning Objectives
- Uncover the right translation strategies for varied particulars in financial statements, considering the functional currency.
- Differentiate between the presentation currency translation (PCT) method and the functional currency translation (FCT) method.
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