If a Parent Company Has a Subsidiary in a Country

question 50

Multiple Choice

If a parent company has a subsidiary in a country where the cumulative rate of inflation for the past three years is around 100 percent, which translation methodology would they use according to the IASC?

• A) the temporal method.
• B) the temporal method after adjusting for inflation.
• C) the current rate method.
• D) the current rate method after adjusting for inflation.

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Definitions:

General Ledger

A comprehensive ledger that contains all the financial accounts of a business, recording every transaction that occurs.

Accounts Receivable Subsidiary Ledger

A detailed ledger that tracks individual transactions with customers, supporting the summary balances shown in the main accounts receivable account.

Accounts Payable

Accounts payable refers to the amounts owed by a company to its creditors for goods or services received that have not yet been paid for.

Nominal Accounts

Accounts that are closed at the end of each accounting period; includes revenue, expense, and withdrawal accounts.