Which of the following statements is correct?
A)If an organization is self-sustaining,dividends must be translated using closing rates.
B)If an organization is self-sustaining,dividends must be translated using average rates.
C)If an organization is self-sustaining,dividends must be translated using historical rates.
D)If an organization is considered an integrated foreign subsidiary dividends must be translated using average rates.

Question

Quizplus · Accepted Answer

If an organization is self-sustaining, which means that it is able to pay for its expenses through its operations, then the historical exchange rates should be used to translate its dividends. This is because the dividends are considered to be a part of the organization's historical transactions, and therefore should be translated using the exchange rates from the time those transactions occurred. On the other hand, if the organization is an integrated foreign subsidiary, then the dividends should be translated using the average exchange rates for the period.

Which of the Following Statements Is Correct