An entity has a subsidiary that operates in a hyperinflationary economy.

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An entity has a subsidiary that operates in a hyperinflationary economy. The subsidiary’s financial statements are measured in terms of the local currency, which is the zloty. The subsidiary’s financial statements have been restated in accordance with IAS 29. The parent is located in the United States and prepares the consolidated financial statements in U.S. dollars. Which of the following accounting procedures is correct in terms of the consolidation of the subsidiary’s financial statements?

(a) The subsidiary’s financial statements should be prepared using the zloty and then retranslated into U.S. dollars.

(b) The subsidiary’s financial statements should be prepared using the zloty, then restated according to IAS 29, and then retranslated into U.S. dollars at closing rates.

(c) The subsidiary’s financial statements should be remeasured in U.S. dollars, then restated according to IAS 29 and consolidated.

(d) The subsidiary’s financial statements should be deconsolidated and not included in the consolidated financial statements.

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