In translating a foreign subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities?
A) The exchange rate in effect when each asset or liability was acquired.
B) The average exchange rate for the current year.
C) A calculated exchange rate based on market value.
D) The exchange rate in effect as of the balance sheet date.
E) The exchange rate in effect at the start of the current year.

Question

Quizplus · Accepted Answer

The current method requires the use of the exchange rate in effect as of the balance sheet date for the translation of a foreign subsidiary's assets and liabilities. This is because the balance sheet displays the financial position of the subsidiary as of that specific date.

In Translating a Foreign Subsidiary's Financial Statements, Which Exchange Rate