Question

Neubart Company owns 100% of the outstanding shares of two European subsidiaries, which operate largely independently and operate in a different industry than Neubart. The subsidiaries' earnings typically are reinvested in their home country. In consolidating the subsidiaries financial statements with those of the U.S. parent, the subsidiaries' financial statement numbers should be:________ a) remeasured using the current rate method. b) remeasured using the temporal method. c) translated using the current rate method. d) translated using the temporal method.

Answer 1

Answer: c) translated using the current rate method.

Explanation:

It should be noted that the translation method is utilized when the financial statements of a subsidiary unit are being expressed in the functional currency of the parent company.

Following the question given above, in consolidating the subsidiaries financial statements with those of the U.S. parent, the subsidiaries' financial statement numbers should be translated using the current rate method.

Therefore, the correct option is C.