Which one of the following statements about the subsidiary’s functional currency is true?

A foreign subsidiary of a U S company has an intercompany loan from the parent company.

Which one of the following statements about the subsidiary’s functional currency is true?
A . It should be the U S dollar if the local currency is hyper inflated
B. It should be determined by the management of the U.S. Company
C. It is the US dollar because the parent company is in the US
D. It is the U S dollar because the subsidiary has an intercompany loan from the parent company

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Answer: A