What Is One Problem in Translating Retained Earnings Using Either

question 46

Multiple Choice

What is one problem in translating retained earnings using either the temporal or current rate method?

• A) There is no problem, since both methods use the historic rate method for stockholders' equity accounts.
• B) Dividends are based on an average cost method.
• C) Net income is calculated differently, depending upon which method is used.
• D) Dividends are based on the current exchange rate under the current rate method, while they are based on historical rates under the temporal method.

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