What of the following factors indicate that the functional currency of a foreign operation is not that of the reporting entity?
A) The activities of the foreign operation are carried out with a significant degree of autonomy.
B) There are no material inter-entity transactions or other exchanges between the foreign entity and the reporting entity.
C) The day-to-day financing of the foreign operation is not supplied by the reporting entity and the cash flows of the reporting entity are largely unaffected by the cash flows of the foreign operation.
D) All of the above.

Question

Quizplus · Accepted Answer

All of the factors listed (A, B, and C) suggest that the functional currency of the foreign operation is not the same as that of the reporting entity. If the foreign operation is operating autonomously, has few transactions with the reporting entity, and has its own financing and cash flows that are not closely tied to those of the reporting entity, then it is likely to have its own functional currency. This may require the reporting entity to adjust its financial statements to reflect the appropriate exchange rates and any currency translation effects.

What of the Following Factors Indicate That the Functional Currency