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1. A parent company needs to determine the appropriate method for translating the financial statements of a foreign subsidiary. To determine the appropriate translation method

1. A parent company needs to determine the appropriate method for translating the financial statements of a foreign subsidiary. To determine the appropriate translation method under both SFAS 52 and IAS 21, the functional currency of a foreign subsidiary must be identified. The functional currency is the primary currency of the foreign entitys operating environment. It can be either the parents reporting currency or a foreign currency (generally the local currency). The functional currency orientation results in the following rule. Please fill in the blanks re translation method and the translation adjustments.

Functional Currency Translation Method Translation Adjustment

Parents currency temporal method ____________________

Foreign currency _________________ ____________________

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