B is corrent. If a foreign subsidiary’s functional currency is the local currency, then the current rate method is used to translate the financial statements. The current rate method requires all revenues and expenses be translated at the rates in effect when these items are recognized during the period. However, due to practical considerations, the weighted-average rates can be used to translate revenues and expenses which were incurred throughout the year. Therefore, B is corrent because the weighted-average exchange rate for the current year may be used to translate both salaries expense and sales to external customers.
A is incorrect. If a foreign subsidiary’s functional currency is the local currency, then the current rate method is used to translate the financial statements. The current rate method requires all revenues and expenses be translated at the rates in effect when these items are recognized during the period. However, due to practical considerations, the weighted-average rates can be used to translate revenues and expenses which were incurred throughout the year.
A is incorrect. If a foreign subsidiary’s functional currency is the local currency, then the current rate method is used to translate the financial statements. The current rate method requires all revenues and expenses be translated at the rates in effect when these items are recognized during the period. However, due to practical considerations, the weighted-average rates can be used to translate revenues and expenses which were incurred throughout the year.
D is incorrect. If a foreign subsidiary’s functional currency is the local currency, then the current rate method is used to translate the financial statements. The current rate method requires all revenues and expenses be translated at the rates in effect when these items are recognized during the period. However, due to practical considerations, the weighted-average rates can be used to translate revenues and expenses which were incurred throughout the year.
