How Should Currency Translation Be Done in Order to Appropriately

question 39

Multiple Choice

How should currency translation be done in order to appropriately compare a financial statement presented in Japanese yen to a financial statement presented in Chinese yuan?

• A)The temporal method should be used.
• B)The historical exchange rates should be used convert financial statement amounts.
• C)All amounts should be converted at the current exchange rate.
• D)Current year statements should be converted at the current exchange rate and prior year statements should be converted at prior year exchange rate.

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Definitions:

Creditor

An individual or entity to whom money is owed by a debtor.

Security Interest

A legal claim on assets granted to a creditor to secure a debt or obligation, providing the right to take property upon failure to repay.

Contribution

The right of insurers (more than one) to share a loss where the policies so provide.

Insurers

Companies or entities that provide insurance coverage to individuals, businesses, or other organizations in exchange for premiums.