When a Country Experiences Hyperinflation, Special Challenges Are Created for Accounting

When a country experiences hyperinflation, special challenges are created for accounting and extraordinary measures are required to preserve the economic integrity of financial statements. Which of the following statements about the accounting treatment of hyperinflation is incorrect?

A) If a country is experiencing hyperinflation, loosely defined as cumulative annual inflation of approximately 100 percent over three years, then the FASB in the U.S. requires that the U.S. dollar be deemed the functional currency, the financial statements are remeasured into dollars using the temporal method, and gains or losses are recorded in the cumulative translation adjustment or CTA account.
B) The treatment of hyperinflation under international accounting standards differs from the procedure in the U.S. in the sense that in local currency financial statements, nonmonetary assets are "grossed up" or restated in current-value money units by applying an inflation index (such as the consumer price index or CPI) adjustment.
C) The bias caused by hyperinflation exists when nonmonetary assets are listed on the balance sheet (and the associated depreciation on the income statement) at historical costs, and when inflation is high the accounting records no longer approximate their real economic value-in fact, they will be grossly undervalued.
D) The problem with the financial statements caused by hyperinflation is that the local money unit no longer serves as a stable storehouse of value (which is implicitly assumed to be the case in accounting) , so the procedures required by both FASB and IASB are intended to restore this real economic stability.
E) None of the statements above; all are correct correct.