In a global world, business combinations can be domestic or international. If a business combination is international, a U.S. parent company’s foreign subsidiaries can still conduct business activities in their local currencies. However, consolidated financial statements must be in U.S. dollars. In other words, the currencies of the non-U.S. subsidiaries’ financial statements must be translated to U.S. dollars. Read Appendix 5A in your text (p.311) and note the current rate and temporal methods of foreign currency translation.
