Under FAS 52, a foreign unit in a highly inflationary economy must use the U.S. dollar as its functional currency.

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Under FAS 52 (Financial Accounting Standard 52), if a foreign entity operates in a highly inflationary economy (defined as cumulative inflation of approximately 100% or more over a three-year period), it must use the reporting currency of the parent company, which for U.S. companies would be the U.S. dollar, as its functional currency. This is to ensure that financial statements reflect the economic reality in a stable currency and are comparable over time.

Under FAS 52, a Foreign Unit in a Highly Inflationary