Which of the following statements is FALSE?
A) If a foreign operation has a functional currency that is not the Canadian dollar, the method of valuation of assets and liabilities is of no consequence in the translation because all of the assets are translated at the closing rate.
B) If a foreign operation has a functional currency that is the Canadian dollar, the method of valuation of assets and liabilities is of no consequence in the translation because all of the assets are translated at the closing rate.
C) If a foreign operation has a functional currency that is the Canadian dollar, a write-down to market may be required in the translated financial statements.
D) If a foreign operation has a functional currency that is the Canadian dollar, no write-down is required in the foreign currency financial statements.

Question

Quizplus · Accepted Answer

Statement B is false because if a foreign operation has the Canadian dollar as its functional currency, the translation method does matter. The translation approach (such as the current rate method or the temporal method) can affect how assets and liabilities are translated, and not all assets are necessarily translated at the closing rate.

Which of the Following Statements Is FALSE