If a foreign entity is only a shell company for carrying accounts that could be carried on the parent's books,
A)the functional currency would generally be the parent's currency.
B)the functional currency would generally be the local currency.
C)there is no reason to hedge transaction exposure.
D)none of the above

Question

Quizplus · Accepted Answer

Since the foreign entity is only a shell company for carrying accounts that could be carried on the parent's books, the functional currency would generally be the parent's currency. Therefore, the parent's currency would be the currency used for financial reporting and determining translation gains and losses.

If a Foreign Entity Is Only a Shell Company for Carrying