Translation of financial statements into the presentation currency requires:
A) translation of assets and liabilities at the closing rate.
B) translation of revenues and expenses at the historical or average rate.
C) both A and B.
D) none of the above.

Question

Quizplus · Accepted Answer

The translation of financial statements into the presentation currency requires both the translation of assets and liabilities at the closing rate and the translation of revenues and expenses at the historical or average rate. This is because assets and liabilities are translated at the closing rate, which is the exchange rate at the balance sheet date, while revenues and expenses are translated at the historical or average rate, which is the exchange rate at the time the transaction occurred. Both A and B are essential for proper translation of financial statements.

Translation of Financial Statements into the Presentation Currency Requires