The Indian subsidiary of a US-based MNC purchased three Caterpillars for its mining work.At the end of the financial year, the financial statements of the subsidiaries need to be translated into the currency of the parent corporation.When the Caterpillars were purchased, the exchange rate was 50 INR= 1USD.The present exchange rate is 60 INR= 1USD.The financial statement of the Indian subsidiary is translated into the currency of the parent corporation at the exchange rate of 60 INR= 1USD.The above serves as an example of the _____ of foreign-currency translation.
A)Wiener process
B)current-rate method
C)Monte Carlo method
D)temporal method
E)Markov process

Question

Quizplus · Accepted Answer

The current-rate method is used for translating the financial statements of a subsidiary into the parent company's currency using the exchange rate at the balance sheet date, which is the scenario described.

The Indian Subsidiary of a US-Based MNC Purchased Three Caterpillars