A French company has a subsidiary in Argentina, which is designated as a highly inflationary country. The subsidiary's functional currency is the Argentine peso. The subsidiary reports land on its books at cost, 25,000 pesos. The price level index was 200 when the land was purchased and is 1,200 now. The €/peso rate was €0.05 when the land was purchased and is €0.008 now.
At what amount, in euros, is the land reported using U.S. GAAP and IFRS?

Question

Quizplus · Accepted Answer

U.S. GAAP: 25,000 pesos x €0.05 = €1,250
IFRS: 25,000 pesos x 1,200/200 x €0.008 = €1,200

A French Company Has a Subsidiary in Argentina, Which Is