special issues

Maneesh 01 May 2020 at 13:15 PM

The FASB Accounting Standards Codification provides specific guidelines for translating foreign currency financial statements. The translation process begins with a determination of whether a foreign affiliate's functional currency is also its local reporting currency. Which one of the following factors indicates that a foreign affiliate's functional currency is the U.S. dollar?

A) Financing is primarily obtained from local foreign sources and from the affiliate's operations.
B) Sales prices are responsive to short-term changes in exchange rates and worldwide competition.
C) Labor, materials, and other costs consist primarily of local costs to the foreign affiliate.
D) Cash flows are primarily in foreign currency and do not affect parent's cash flows.