Belarus has an annual inflation rate of 43 percent. If a subsidiary company, based in Belarus, uses the Belarusian ruble as its functional currency, Polish zlotys as its currency of books and records, and French euros as the parent company’s reporting currency, then the subsidiary company must first translate its financial statements

Question

a. from euros into Belarusian rubles.
b. from zlotys into U.S. dollars.
c. from Belarusian rubles into euros.
d. from zlotys into euros.
e. from Belarusian rubles into zlotys.

Answer 1

In this scenario, the subsidiary company based in Belarus has the Belarusian ruble as its functional currency and uses Polish zlotys for its books and records. The parent company reports in euros.

To convert the financial statements accurately, the subsidiary first needs to translate from its functional currency (Belarusian rubles) into the currency it uses for its books and records (Polish zlotys). However, the question indicates that the subsidiary is already using zlotys for its books. Therefore, the key step is to translate the financial statements from the Belarusian ruble (the functional currency) to euros (the reporting currency).

Thus, the correct answer is:

c. from Belarusian rubles into euros.