Sachen Company uses the local currency for each country in which it operates as its functional currency. When translating statements into U.S. dollars they should use:

Question

Quizplus · Accepted Answer

When a company uses the local currency as the functional currency, the current rate method is the best option for translating financial statements into U.S. dollars. This method uses the current exchange rate between the local currency and the U.S. dollar to convert balance sheet items at the current exchange rate and income statement items at the average exchange rate for the period. This method is suitable for companies that have minimal exposure to foreign exchange risk or that operate in countries with stable economies and exchange rates.

Sachen Company Uses the Local Currency for Each Country in Which