The financial statements of a foreign subsidiary must be restated in terms of the reporting currency before consolidation can take place.

Question

Quizplus · Accepted Answer

Restating the financial statements of a foreign subsidiary in terms of the reporting currency is known as translation, and is a necessary step in the consolidation process. This allows for all financial information to be presented in a consistent reporting currency for the parent company's financial statements.

The Financial Statements of a Foreign Subsidiary Must Be Restated