1. A foreign company maintains its books and records in its domestic currency. Identify several factors that might suggest that the domestic currency is not the entity’s functional currency. 2. Assume...

1. A foreign company maintains its books and records in its domestic currency. Identify several factors that might suggest that the domestic currency is not the entity’s functional currency.

2. Assume that a U.S. company has a French subsidiary whose functional currency is the euro. Explain why the translation adjustment is not included as a component of net income on the consolidated income statement.