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.

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Definitions:

Concentration Gradient

The gradual difference in the concentration of solutes in a solution between two regions. In biology, it often refers to differences across a membrane.

Carrier

A molecule or protein that transports substances across a cell membrane, or a person or animal that transmits a disease-causing agent without showing symptoms.

Mediated Transport

The process of moving molecules across a cellular membrane through the use of specific protein channels or carriers.

Carrier Molecules

Molecules that help transport substances across a cell membrane or within the body, similar in function to carrier proteins but can include a broader range of molecules.