_____ Under FAS 52, which of the following statements is true concerning foreign units located in highly inflationary economies?
A) Fixed assets are restated upward for inflation before translation.
B) Restatement to U.S. GAAP is not necessary.
C) The U.S. dollar unit of measure approach is required.
D) The current rate method of translation is required.
E) None of the above.

Question

Quizplus · Accepted Answer

Under FAS 52, for foreign entities operating in highly inflationary economies (defined as those experiencing cumulative inflation of approximately 100% or more over a three-year period), the financial statements must be remeasured to the parent company's reporting currency using the temporal method, also known as the U.S. dollar unit of measure approach. This approach contrasts with the current rate method, which is generally used when the foreign entity operates in a non-highly inflationary economy.

_____ Under FAS 52, Which of the Following Statements Is