[Biff-1955-Tannen]

Idk if I’ve been doing MCQ too long today or what, but I don’t understand this answer. If the subsidiary’s functional currency is the U.S. dollar, why would there be a balance arising from translation or remeasurement? What is there to translate if it’s already U.S. dollar? I would expect a balance to arise from translation if the subsidiary’s functional currency is NOT the U.S. dollar… See what I’m saying? Can somebody explain this?

A balance arising from the translation or remeasurement of a subsidiary’s foreign currency financial statements is reported in the consolidated income statement when the subsidiary’s functional currency is:

A.

neither the foreign currency nor the U.S. dollar.

B.

the U.S. dollar.

Incorrect C.

the foreign currency.

The objective of translation or remeasurement is to report the subsidiary’s income statement results in the U.S. parent’s currency—which is the U.S. dollar.

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[Biff-1955-Tannen]

Anybody?

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[Spartans92]

It is B, the US Dollar because the sub has been buying and selling with the US dollar but keeping their books in another currency. But the functional currency is the dollar not the foreign currency. therefore, you have to remeasure your books from foreign currency to US dollar. This goes into the income statement. Hope that helps.

BEC- PASS

[Biff-1955-Tannen]

Ok I see what you're saying. That helps. Thanks

AUD 93 Jan 16
BEC 83 Feb 16
FAR 83 Apr 16
REG 84 May 16

99% Ninja MCQ only

[Author]

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