The two basic methods for the translation of foreign subsidiary financial statements are the ________ method and the ________ method.
A) current rate; temporal
B) temporal; proper timing
C) current rate; future rate
D) none of the above

Question

Quizplus · Accepted Answer

The two basic methods for the translation of foreign subsidiary financial statements are the current rate method and the temporal method. The current rate method uses the current exchange rate to translate all of the foreign subsidiary's balance sheet and income statement items. The temporal method uses different exchange rates depending on whether the balance sheet or income statement item is monetary (cash, accounts payable, etc.) or non-monetary (inventory, property, etc.). The proper timing method and future rate method are not commonly used for the translation of foreign subsidiary financial statements.

The Two Basic Methods for the Translation of Foreign Subsidiary