Asked by Kenny Wayne on Jun 11, 2024

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In translating a foreign subsidiary's financial statements, what exchange rate should be used for the subsidiary's revenues and expenses?

Exchange Rate

The price of one currency in terms of another, determining how much of one currency can be exchanged for another.

Foreign Subsidiary's Financial Statements

Accounting records that reflect the financial performance and position of a company's subsidiary located in another country.

Revenues And Expenses

The income earned from normal business operations and the costs incurred to generate that income, respectively, within a specific period.

  • Acquire knowledge on the process of converting and adjusting financial statements from foreign currencies.
  • Understand the theories and practical application of current rate and temporal approaches in translating foreign currency.
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DD
Diane DeboltJun 11, 2024
Final Answer :
The historical rate that was in effect when the revenues and expenses were incurred should be used unless those revenues and expenses occur throughout the year, and then a weighted average exchange rate for the year may be used.