Several features differentiate internationally based reports from domestically oriented financial statements. Among them are the issues of foreign subsidiary characterization, the functional currency approach of U.S. MNCs, and the translation of individual accounts.
For a multinational company based outside the United States, its foreign subsidiaries’ type of operations will determine the translation method the firm will use. For U.S.-based MNCs, the determining factor is the functional currency of each subsidiary. Table 19.2 provides further details on these points.
|Type of operation||Translation ...|