Dividends of a foreign subsidiary are translated at:
A)the average exchange rate for the year.
B)the exchange rate on the date of declaration.
C)the current exchange rate on the date of preparation of the financial statement.
D)the exchange rate on the record date.

Question

Quizplus · Accepted Answer

Dividends of a foreign subsidiary are translated at the exchange rate on the date of declaration because this is the date when the dividend is legally declared and the rights to receive the dividend are established. Therefore, this exchange rate reflects the value of the dividend in the functional currency of the parent company.

Dividends of a Foreign Subsidiary Are Translated At