Under the U.S. method of translation procedures, if the financial statements of the foreign subsidiary of a U.S. company are maintained in the local currency, and the U.S. dollar is the functional currency, then:
A) translation is not required.
B) translation is accomplished through the current rate method.
C) translation is accomplished through the temporal method.
D) none of the above

Question

Quizplus · Accepted Answer

When the U.S. dollar is the functional currency and the financial statements of a foreign subsidiary are maintained in the local currency, the temporal method is used for translation. This method translates assets and liabilities at the exchange rate at the balance sheet date, with some specific exceptions.