Which of the following situations would NOT require remeasurement of a foreign affiliate's financial statements?

A. The foreign affiliate is a shipping subsidiary that primarily transports ore from a U.S. company's foreign mines to the United States for processing in a U.S. company's smelting plants.
B. The foreign affiliate is primarily a conduit for Euro borrowings to finance operations in the United States.
C. The foreign affiliate primarily manufactures a subassembly that is shipped to a U.S. plant for inclusion in a product that is sold to customers located in the U.S. or in different parts of the world.
D. All of the above.
E. None of the above.

Correct Answer: E

Letters A through C all describe situations provided by the FASB as examples of situations that WOULD require remeasurement. A fourth example is that of a foreign affiliate of a U.S. manufacturer that primarily takes orders from foreign customers for U.S.-manufactured goods, which bills and collects from foreign customers, and which might have a warehouse to provide for timely delivery of the product to those foreign customers. This foreign operation may be the same as the export sales department of a U.S. manufacturer. In general, the foreign affiliate may be thought of as a direct production or sales arm of the U.S. company, but it uses the local currency to record and report its operations.