When translating into the functional currency, monetary liabilities are translated using the:
A) exchange rate prevailing at the end of the last reporting period.
B) exchange rate current at the date the item was first recorded.
C) exchange rate current at end of reporting period.
D) closing exchange rate.

Question

Quizplus · Accepted Answer

According to the current accounting standards, monetary liabilities are translated using the exchange rate current at the end of the reporting period. This is consistent with the principle of using current or market values for financial reporting. Using the closing exchange rate or the rate at the date of recording may not accurately reflect the current value of the liability.

When Translating into the Functional Currency, Monetary Liabilities Are Translated