According to FASB Statement No. 52,
A) translation losses had to be recognized, whereas gains were deferred.
B) both the temporal and current rate methods were permitted.
C) the choice of translation methodology is independent of the choice of functional currency.
D) the temporal method is the only translation method allowed.

Question

Quizplus · Accepted Answer

FASB Statement No. 52 permits both the temporal and the current rate methods for translation of financial statements of foreign entities. These methods are based on different principles and are used depending on the specific circumstances of the foreign entity and its functional currency. The choice of the translation methodology depends on factors such as the economic environment in which the foreign entity operates, the nature of its assets and liabilities, and the reporting currency of its financial statements.