The functional currency of a Malaysian subsidiary that assembles computers using U.S.?made parts, which it then sells in the United States, would most likely be the

A) U.S. dollar
B) Malaysian ringgit
C) The supplier's currency
D) The lender's currency

Question

The functional currency of a Malaysian subsidiary that assembles computers using U.S.?made parts, which it then sells in the United States, would most likely be the

A) U.S. dollar
B) Malaysian ringgit
C) The supplier's currency
D) The lender's currency

Quizplus · Accepted Answer

The functional currency of a subsidiary is the currency of the primary economic environment in which it operates. In this case, since the subsidiary sells its products in the United States using U.S.-made parts, the primary economic environment is the United States, and therefore the functional currency would be the U.S. dollar.

The Functional Currency of a Malaysian Subsidiary That Assembles Computers