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Answer each of the following questions and cite appropriate justification for your answer
Answer each of the following questions and cite appropriate justification for your answer. (GAAP ASC Codification)
3. Company A has a foreign subsidiary located in a country that historically has had a highly inflationary economy. However, during the current year, the economy of the country of the foreign subsidiary is no longer considered highly inflationary. How does this change affect Company A’s accounting and reporting related to the foreign subsidiary?
Expert Solution
Inflation accounting could be a special accounting technique that may be used during times of high inflation whereby monetary statements square measure adjusted per worth indexes, instead of relying alone on a price accounting basis. firms in operation in countries experiencing speedy and sustained levels of inflation or hyperinflation is also needed to update their statements sporadically so as to create them relevant to current economic and monetary conditions.
If the Subsidiary isn't any longer extremely inflationary then Company a desire not follow the Inflation accounting any more.
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