Under FASB ASC 830, Foreign Currency Matters, what is the definition of "functional currency?"
A) The primary currency used by the parent company
B) The currency that minimizes the translation adjustment on the consolidated financial statements
C) The currency in which the subsidiary does its financial reporting
D) The primary currency of the foreign entity's operating environment

Question

Quizplus · Accepted Answer

The functional currency, as defined by FASB ASC 830, is the primary currency of the foreign entity's operating environment. This means it is the currency of the primary economic environment in which the entity operates, not necessarily the currency in which it does its financial reporting or the currency of its parent company.

Under FASB ASC 830, Foreign Currency Matters, What Is the Definition