When Translating Foreign Subsidiary Income Statements Using the Current Rate

question 11

Multiple Choice

When translating foreign subsidiary income statements using the current rate method,why are some accounts translated at an average rate?

• A)This approach improves matching.
• B)This approach accentuates the conservatism principle.
• C)This approach smoothes out highly volatile exchange rate fluctuations.
• D)This approach approximates the effect of transactions which occur continuously during the period.

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