I wanted to know why do we translate the F/S of our subsidiaries who are not independent & whose functional currency is the parent co’s., local currency?
Why I had this doubt?
Because functional currency (FC) means the currency in which the business is being conducted primarily, so, if USD(say) is the FC & the parent co’s., location is USA, why the co., needs translation?
It would be overwhelming if someone can explain why. Thank you!
There are several reasons why a parent company may choose to translate the financial statements of its subsidiaries, even if those subsidiaries are not independent and their functional currency is the parent company’s local currency. Some of the main reasons include:
Overall, translating the financial statements of subsidiaries into the parent company’s local currency can help provide a more complete picture of the organization’s financial health and performance, and can help facilitate planning, decision-making, and compliance with accounting and regulatory standards.