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:

Thrombin

An enzyme in blood plasma that causes the clotting of blood by converting fibrinogen to fibrin.

Prothrombin

A protein present in blood plasma that is converted into active thrombin during coagulation, playing a key role in blood clot formation.

Fibrinogen

A soluble plasma protein that is converted to the insoluble protein fibrin during blood clotting.

Fibrin

A fibrous protein involved in the clotting of blood, formed from fibrinogen in response to injury.