The Mexican subsidiary of an American durables giant acquired a market research firm a few months ago.The rate of exchange at the time of acquisition was 12 pesos= 1 dollar.At the end of the financial year the subsidiaries' financial statements need to be translated into the currency of the parent corporation.The current exchange rate is 10 pesos= 1 dollar.The subsidiaries' financial statement is translated into the currency of the parent corporation at the exchange rate of 12 pesos= 1 dollar.The above serves as an example of the _____ of foreign-currency translation.

Question

Quizplus · Accepted Answer

The temporal method is used for foreign-currency translation in this scenario, where specific assets and liabilities are translated at the exchange rate that was in effect at the time of the transaction, in this case, 12 pesos = 1 dollar.

The Mexican Subsidiary of an American Durables Giant Acquired a Market