How Is the International Standard for Translating Foreign Currency Financial

question 16

Multiple Choice

How is the international standard for translating foreign currency financial statements (IAS 21) different from U.S. GAAP with respect to subsidiaries in hyperinflationary economies?

• A) IAS 21 requires that the subsidiary's financial statements be restated to account for the inflation before using the current exchange rate for all balance sheet accounts.
• B) IAS 21 requires that the temporal method be used for translating the foreign currency financial statement.
• C) IAS 21 requires the current rate method without taking into consideration any inflation adjustment.
• D) U.S. GAAP requires that foreign subsidiary financial statements be restated to account for inflation before applying the current rate method.

---

Definitions:

Active Transport

The movement of substances across cell membranes against a concentration gradient, requiring energy expenditure by the cell.

Cryptocurrency

A digital or virtual currency that uses cryptography for secure financial transactions, and operates independently of a central bank.

Public Ledger

A ledger available to the public that records all transactions in a network, commonly associated with blockchain technology.

Codec

A device or program that compresses data to enable faster transmission and decompresses received data.