The basic advantage of the ________ method of foreign currency translation is that foreign nonmonetary assets are carried at their original cost in the parent's consolidated statement while the most important advantage of the ________ method is that the gain or loss from translation does not pass through the income statement.
A) monetary; current rate
B) temporal; current rate
C) temporal; monetary
D) current rate; temporal

Question

Quizplus · Accepted Answer

The basic advantage of the current rate method is that it simplifies the translation process by using a single exchange rate for all assets and liabilities, ensuring that foreign nonmonetary assets are carried at their original cost in the parent's consolidated statement. The most significant advantage of the temporal method is that it avoids impacting the income statement with translation gains or losses, as these are directly adjusted in the equity section of the balance sheet.

The Basic Advantage of the ________ Method of Foreign Currency