Under the temporal method of consolidating foreign currency financial statements, what exchange rate should be used for translating the depreciation expense recorded by a subsidiary?
A) Average rate
B) Current rate
C) Historical rate
D) Forward rate

Question

Quizplus · Accepted Answer

Under the temporal method, non-monetary assets and related expenses such as depreciation are translated at historical rates. This is because the cost of the asset and its related depreciation expense should reflect the exchange rate in effect at the time the asset was acquired.

Under the Temporal Method of Consolidating Foreign Currency Financial Statements