Under FASB ASC 830, Foreign Currency Matters, When the Temporal

question 39

Multiple Choice

Under FASB ASC 830, Foreign Currency Matters, when the temporal method is used, how are translation adjustments treated in the consolidated financial statements?

• A) As gains or losses on the current period consolidated income statement
• B) As prior period adjustments to retained earnings of the parent
• C) As part of other comprehensive income on the consolidated balance sheet
• D) None of the above because the temporal method is not allowed under FASB ASC 830.

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Definitions:

Nominal Rate

The interest rate stated on a financial product or agreement without adjustment for inflation or other factors that affect the real value of returns.

Stated Value

Stated value refers to an arbitrary value assigned to the no-par value stock by the board of directors of a company, used for accounting purposes.

Effective Yield

The total yield on an investment, taking into account all compounding periods, fees, and other factors affecting the actual return.

Stated Rate

The interest rate declared on a financial instrument, such as a bond or loan, not taking into account compounding or fees.