Paskin Corporation's wholly-owned Canadian subsidiary has a Canadian dollar functional currency.In translating the subsidiary's account balances into U.S.dollars for reporting purposes,which one of the following accounts would be translated at historical exchange rates?

Question

Quizplus · Accepted Answer

Capital Stock represents historical investment made in the subsidiary and is not subject to fluctuations in exchange rates. Therefore, it would be translated at historical exchange rates. Accounts Receivable and Notes Payable represent current assets and liabilities that are subject to fluctuations in exchange rates and therefore would be translated at current exchange rates. Retained Earnings represents the accumulation of earnings over time, and as such, may consist of transactions that occurred over different time periods and would be translated at weighted-average exchange rates.

Paskin Corporation's Wholly-Owned Canadian Subsidiary Has a Canadian Dollar Functional