An analyst is using U.S.Generally Accepted Accounting Principles (GAAP )to estimate the value of a subsidiary of a U.S.firm,and the country of the subsidiary is experiencing hyperinflation.In this case,which of the following accounting techniques is recommended?

Question

Quizplus · Accepted Answer

The temporal method is recommended in this scenario as it adjusts the value of the subsidiary's assets and liabilities to reflect the current exchange rate and inflation. This method is specifically designed to account for hyperinflation in a foreign subsidiary's country. Other methods, such as the current method and inflation-adjusted current method, may not accurately reflect the economic conditions in the subsidiary's country. Autoregressive method is not an accounting technique used for financial statement preparation.

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