When exchange rates change,the value of a foreign subsidiary's assets and liabilities that are denominated in a foreign currency change
A)when they are viewed from the perspective of the subsidiary firm.
B)when they are viewed from the perspective of the parent firm.
C)but this is only of material concern if the parent firm is liquidating the subsidiary in a bankruptcy and is forced to realize the value of the assets and liabilities at the current exchange rate.
D)none of the options

Question

Quizplus · Accepted Answer

The value of a foreign subsidiary's assets and liabilities that are denominated in a foreign currency change when viewed from the perspective of the parent firm. This is because the parent firm consolidates the financial statements of its subsidiaries into its own financial statements, and any changes in exchange rates affect the overall financial position of the parent firm.

When Exchange Rates Change,the Value of a Foreign Subsidiary's Assets