Which exchange rates are used for foreign subsidiaries with different functional currencies? Using the following abbreviations identify which of the below are correct methods for converting accounts receivable.

Year-end rates: YE
Average rates: AR
Historical rates: HR
$$\begin{array} { c c c }
& \text { Temporal } & \text { Current rate } \
\text { A) } & \mathrm { AR } & \mathrm { AR } \
\text { B) } & \mathrm { YE } & \mathrm { YE } \
\text { C) } & \mathrm { YE } & \mathrm { AR } \
\text { D) } & \mathrm { HR } & \mathrm { YE }
\end{array}$$

Question

Which exchange rates are used for foreign subsidiaries with different functional currencies? Using the following abbreviations identify which of the below are correct methods for converting accounts receivable.

Year-end rates: YE 
Average rates: AR
Historical rates: HR
$$\begin{array} { c c c } 
& \text { Temporal } & \text { Current rate } \
\text { A) } & \mathrm { AR } & \mathrm { AR } \
\text { B) } & \mathrm { YE } & \mathrm { YE } \
\text { C) } & \mathrm { YE } & \mathrm { AR } \
\text { D) } & \mathrm { HR } & \mathrm { YE }
\end{array}$$

Quizplus · Accepted Answer

For foreign subsidiaries with different functional currencies, when using the current rate method, all assets and liabilities are translated at the year-end rate (YE). This includes accounts receivable, making option B correct.

Which Exchange Rates Are Used for Foreign Subsidiaries with Different