Question: In the situation where the foreign subsidiary operates in a hyperinflationary economy and the functional currency is the Canadian dollar, what steps should be taken

In the situation where the foreign subsidiary operates in a hyperinflationary economy and the functional currency is the Canadian dollar, what steps should be taken by the Canadian parent company to translate the subsidiary's financial statements?

Multiple Choice

The financial statements will be translated using the FCT method as usual. No steps are taken to adjust for inflation because the Canadian dollar is not subject to inflation.

The financial statements will be translated using the PCT method as usual. No steps are taken to adjust for inflation because the Canadian dollar is not subject to inflation.

The financial statements will have to be adjusted for inflation prior to being translated using the PCT method.

The financial statements cannot be translated. The equity method will be used to report the investment.

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