Which combination of accounts and exchange rates is correct for the remeasurement of a foreign entity's financial statements from its local currency to U.S. dollars?
A) Option A
B) Option B
C) Option C
D) Option D

Question

Which combination of accounts and exchange rates is correct for the remeasurement of a foreign entity's financial statements from its local currency to U.S. dollars? 
A) Option A 
B) Option B 
C) Option C 
D) Option D

Quizplus · Accepted Answer

Option C is the correct combination of accounts and exchange rates for the remeasurement of a foreign entity's financial statements from its local currency to U.S. dollars. The functional currency should be translated using the current exchange rate, while non-monetary assets and liabilities (such as inventory) should be translated using historical exchange rates. This ensures that fluctuations in the exchange rate do not affect the reported value of non-monetary items. Finally, all gains and losses resulting from the translation should be recorded in other comprehensive income.

Which Combination of Accounts and Exchange Rates Is Correct for the Remeasurement