A U.S.-based parent company must determine the functional currency of each of its foreign entities to decide an appropriate translation method to use in translating each entity’s financial statements. The question arises as to whether an entity’s functional currency could be considered to change over time, and if so, how to handle this change. Search the FASB’s Original Pronouncements using either hard copy or the Financial Accounting Research System (FARS) database.

 LO6 Required

a. Identify the authoritative pronouncement and paragraph!s) within it that address whether the deter¬ mination of functional currency of a foreign entity can change over time.

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