Which of the following statements is correct with respect to the translation of cost of sales in an integrated foreign subsidiary (i.e., the functional currency of the foreign operation is the same as the parent)?
A) Opening inventory is translated using an average rate.
B) Opening inventory is translated using closing rates.
C) Ending inventory is translated using an average rate.
D)Ending inventory is translated using the rate in effect when the inventory was acquired.

Question

Quizplus · Accepted Answer

Ending inventory is translated using the rate in effect when the inventory was acquired because it reflects the historical cost principle, which is consistent with the functional currency approach for integrated foreign subsidiaries.

Which of the Following Statements Is Correct with Respect to the Translation