If the functional currency is determined to not be the foreign entity's local currency, translation is done using
A)the current rate method
B)the functional method
C)the re-measurere-measurement method
D)the derivative method

Question

If the functional currency is determined to not be the foreign entity's local currency, translation is done using
A)​the current rate method
B)​the functional method
C)​the re-measurere-measurement method
D)​the derivative method

Quizplus · Accepted Answer

If the foreign entity's functional currency is not its local currency, then the re-measurement method is used for translation. This method involves restating the foreign entity's financial statements in the reporting currency using the exchange rates at the balance sheet date. This results in changes in the carrying amounts of assets and liabilities due to fluctuations in exchange rates.

If the Functional Currency Is Determined to Not Be the Foreign