_____ Which of the following items is a factor pointing toward the use of the U.S. dollar as the functional currency?
A) The exchange rate widely fluctuates during the year.
B) A high volume of intercompany transactions occurs.
C) Financing is primarily denominated in the foreign currency.
D) An active sales market exists in the foreign country.
E) None of the above.

Question

Quizplus · Accepted Answer

A high volume of intercompany transactions suggests that the entity is closely integrated with the parent company, which often uses the U.S. dollar as its functional currency. This integration can make the U.S. dollar a more appropriate functional currency for the subsidiary.

_____ Which of the Following Items Is a Factor Pointing