You are a manger in the accounting department of Greene company. Greeneis a rapidly expanding manufacturing company, and is considering some additional acquisitions.The company would like to diversify, and is trying to decide between the two different scenarios. To help him make his decision, the Chief Financial Officer would like specific information on how the potential acquisitions would affect financial reporting.
In a separate scenario, Greene is investigating purchasing two overseas manufacturing companies that would be included in Greene’s consolidated financial statements as wholly owned subsidiaries. One company is located in New Zealand, and the other company is located in Spain. The CFO would like to know what factors need to be considered when determining the functional currency for a consolidated subsidiary. Research the Accounting Standards Codification to see what guidance is provided, and prepare a 2 page memo to the CFO explaining the various economic indicators to be considered both individually and collectively.
Submit your memo regarding functional currency and use your spreasheet from last week to back up your position