A factor to be considered in determining a foreign unit's functional currency is whether inventory is purchased from the parent company versus unrelated vendors located in the United States.

Question

Quizplus · Accepted Answer

The primary factor in determining a foreign entity's functional currency is the currency of the primary economic environment in which the entity operates. Transactions with the parent company, including the purchase of inventory, can influence this determination if they are significant to the entity's operations. However, purchasing inventory from unrelated vendors in the United States alone does not solely determine the functional currency; it's one of many factors considered in assessing the primary economic environment.

A Factor to Be Considered in Determining a Foreign Unit's