When translating into the functional currency, foreign currency denominated non-monetary items measured using historical cost must be translated using the:
A) rate current at end of reporting period.
B) average rate for the reporting period.
C) exchange rate at the date of the transaction.
D) rate prevailing at the end of the previous financial year.

Question

Quizplus · Accepted Answer

Foreign currency denominated non-monetary items measured using historical cost are translated using the exchange rate at the date of the transaction. This approach maintains the historical cost principle by reflecting the actual cost at the time of the transaction.

When Translating into the Functional Currency, Foreign Currency Denominated Non-Monetary