Under the Temporal Method of Consolidating Foreign Currency Financial Statements

question 56

Multiple Choice

Under the temporal method of consolidating foreign currency financial statements, what exchange rate should be used for translating the depreciation expense recorded by a subsidiary?

• A) Average rate
• B) Current rate
• C) Historical rate
• D) Forward rate

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Definitions:

Common Stock

Equity ownership in a corporation, with rights to vote on corporate matters and receive dividends.

Accounts Payable

Obligations or amounts owed by a business to suppliers or vendors for goods and services received.

Inventory

The goods and materials a business holds for the ultimate goal of resale or production.

Amortization

The process of spreading out a loan into a series of fixed payments over time, which includes both principal and interest.