Which of the following is an indication that the functional currency of a foreign operation is not the Canadian dollar?
A) Only goods imported from the parent are sold by the subsidiary.
B) The parent dictates the subsidiary's operating procedures.
C) Cash to pay obligations is generated by local operations or borrowed from local lenders.
D) Intercompany transactions account for a high proportion of the subsidiary's overall activities.

Question

Quizplus · Accepted Answer

If cash to pay obligations is generated by local operations or borrowed from local lenders, it indicates that the subsidiary is operating independently in the local currency and not relying solely on the parent company. This suggests that the functional currency is likely the local currency and not the Canadian dollar.

Which of the Following Is an Indication That the Functional