A Danish subsidiary of a U.S.corporation recorded a building it purchased in 2010 for 100,000,000 krone, when the exchange rate was $0.132/krone.The current exchange rate is $0.163/krone.Under the temporal method, how should the translated amount of the restated asset be interpreted?
A)The U.S.parent would have to pay $16,300,000 to acquire the building today.
B)The U.S.parent would have had to pay $13,200,000 to acquire the building in 2010.
C)The building is worth $13,200,000 to the U.S.parent today.
D)None of the above

Question

Quizplus · Accepted Answer

Under the temporal method, assets acquired at historical rates are translated at the exchange rate in effect at the date of acquisition. Therefore, the building purchased in 2010 for 100,000,000 krone at an exchange rate of $0.132/krone would have been translated to $13,200,000 at the time of purchase.

A Danish Subsidiary of a U