Foreign Currency Accounting

Question 1

Under US GAAP: Definition of a functional currency

Answer 1

he foreign subsidiary’s functional currency is the currency of the environment in which the subsidiary primarily generates and expends cash.
Rule: The functional currency of a company may be:
A foreign entity’s local currency, which is typically the one in which the entity keeps its books;
The currency in which the financial statements will be presented, which is the currency of the parent company; or
A foreign currency other than the one in which the foreign entity maintains its books