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.

Question

Quizplus · Accepted Answer

If the functional currency of the foreign operation is the same as the parent's functional currency, the financial statements of the foreign operation will be translated using the Functional Currency Translation (FCT) method. This is because there is no currency translation required as both use the same functional currency.

If the Functional Currency of the Foreign Operation Is the Same