Which one of the following items from the financial statements of a foreign subs
ID: 2432847 • Letter: W
Question
Which one of the following items from the financial statements of a foreign subsidiary (local currency is functional currency) would be translated into dollars using the historical exchange rate?
inventories priced at the lower of cost or market
accounts payable
amortization of bond premium
d.
Common Stock
Which one of the following items from the financial statements of a foreign subsidiary (local currency is functional currency) would be translated into dollars using the historical exchange rate?
Answers: a.inventories priced at the lower of cost or market
b.accounts payable
c.amortization of bond premium
d.
Common Stock
Explanation / Answer
d. Common Stock
Nonmonetary items (like common stocks) are translated using historical exchange rates whereas monetary assets (like account payable) are calculated using current exchange rate.
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