A French company has a subsidiary in Venezuela, which is designated as a highly inflationary country. The subsidiary's functional currency is the Venezuelan bolivar. The subsidiary reports land on its books at cost, 10,000 bolivars. The price level index was 100 when the land was purchased and is 900 now. The €/bolivar rate was €0.90 when the land was purchased and is €0.10 now. At what amount, in euros, is the land reported using U.S. GAAP and IFRS?

Question

Quizplus · Accepted Answer

U.S. GAAP: 10,000 bolivars x €0.90 = €9,000
IFRS: 10,000 bolivars x 900/100 x €0.10 = €9,000

A French Company Has a Subsidiary in Venezuela, Which Is