A foreign subsidiary of a U.S.-based parent company can have more than one distinct and separable oper¬ ation. For example, a foreign subsidiary can have one operation that sells the parent company’s products and another operation that manufactures and sells its own products. The question arises whether a single foreign entity could be considered to have more than one functional currency. Search the FASB’s Original Pronouncements using either hard copy or the Financial Accounting Research System (FARS) database.

Required LO6

a. Identify the authoritative pronouncement and paragraph(s) within that pronouncement that address whether a foreign entity can have different functional currencies.

b. Summarize the guidance the FASB provided with respect to this particular issue.