33. Which of he following defines a foreign-based entity that uses a functional currency different from the local currency? I. A U.S. subsidiary in Britain maintains its accounting records in pounds sterling, with the majority of its transactions denominated in pounds sterling. II. A U.S. subsidiary in Peru conducts virtually all of its business in Latin America, and uses the U.S. dollar as its major currency. A. I. B. II. C. Both I and II. D. Neither I nor II. 34. When the local currency of the foreign subsidiary is the functional currency, a foreign subsidiary's inventory carried at cost would be converted to U.S. dollars by: A. translation using historical exchange rates. B. remeasurement using historical exchange rates. C. remeasurement using the current exchange rate. D. translation using the current exchange rate. 35. The gain or loss on the effective portion of a U.S. parent company's hedge of a net investment in a foreign entity should be treated as: A. an adjustment to the retained earnings account in the stockholders' equity section of its balance sheet. B. other comprehensive income. C. a translation gain or loss in the computation of net income for the reporting period. D. an adjustment to a valuation account in the asset section of its balance sheet