If a foreign entity is only a shell company for carrying accounts that could be carried on the parent's books,
A)the functional currency would generally be the parent's currency.
B)the functional currency would generally be the local currency.
C)there is no reason to hedge transaction exposure.
D)none of the options

Question

Quizplus · Accepted Answer

Since the shell company is only carrying accounts that could be carried on the parent's books, it is likely that the parent company is the primary decision-maker regarding the financial operations of the entity. As such, the functional currency would most likely be the parent's currency, since the parent would be consolidating the financial statements of the shell company with their own.

If a Foreign Entity Is Only a Shell Company for Carrying