Which of the following statements is correct with respect to the translation of cost of sales in a foreign operation where the functional currency of the foreign operation is the same as the parent's functional currency?
A) Opening inventory is translated using an average rate.
B) Opening inventory is translated using closing rates.
C) Ending inventory is translated using an average rate.
D) Ending inventory is translated using the rate in effect when the inventory was acquired.

Question

Quizplus · Accepted Answer

When the functional currency of the foreign operation is the same as the parent's functional currency, the translation of cost of sales includes translating opening and closing inventory at historical exchange rates. Ending inventory is translated using the rate in effect when the inventory was acquired. Therefore, option D is correct.

Which of the Following Statements Is Correct with Respect to the Translation