Selvey Inc.is a wholly-owned subsidiary of Parsfield Incorporated,a U.S.firm.The country where Selvey operates is determined to have a highly inflationary economy according to GAAP definitions.Therefore,for purposes of preparing consolidated financial statements,the functional currency is

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In a highly inflationary economy, according to U.S. GAAP, the functional currency for the subsidiary should be the parent company's reporting currency, which in this case is the U.S. dollar. This is to protect the consolidated financial statements from the effects of hyperinflation in the subsidiary's local economy.