Cho Co., a public Canadian corporation, has a subsidiary in South Africa. It has been determined that the functional currency of the foreign operations is the South African rand. Which of the following statements is true?
A)Cho Co.'s financial statements will have to be translated into South African rand.
B)The presentation currency is the Canadian dollar.
C)Cho's transactions with the subsidiary will need to be re-measured.
D)Cho will not be required to consolidate.

Question

Quizplus · Accepted Answer

The presentation currency is the currency in which the financial statements will be presented to the shareholders and other stakeholders. In this case, the presentation currency is the Canadian dollar. Cho Co.'s financial statements will be prepared in Canadian dollars, and the results of the subsidiary operations will be translated into Canadian dollars using the appropriate exchange rate. There is no need to re-measure the transactions with the subsidiary or consolidate the subsidiary's financial statements.

Cho Co, a Public Canadian Corporation, Has a Subsidiary in South