Impact of Currency Depreciation on Financial Statements

Medium Multinational Operations Impact On Financial Statements

Company Z is a multinational corporation that operates in various countries with different functional currencies. Recently, it reported a significant depreciation of the local currency in one of its primary markets. The financial statements were prepared in the parent company’s functional currency. What is the likely impact of this depreciation on Company Z’s financial statements?

Revenue reported in the financial statements will increase when converted to the parent company's currency.

The total assets reported will decrease when converted to the parent company's currency.

Net income will remain unaffected as currency effects only impact balance sheet items.

Hint

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