In translating a foreign subsidiary's financial statements, which exchange rate does the current method require for the subsidiary's assets and liabilities?
A) the exchange rate in effect when each asset or liability was acquired.
B) the average exchange rate for the current year.
C) a calculated exchange rate based on market value.
D) the exchange rate in effect as of the balance sheet date.
E) the exchange rate in effect at the start of the current year.

Question

Quizplus · Accepted Answer

The current method requires the use of the exchange rate in effect as of the balance sheet date for the subsidiary's assets and liabilities. This is also known as the closing rate.

In Translating a Foreign Subsidiary's Financial Statements, Which Exchange Rate