A Danish subsidiary of a U.S.corporation recorded a building it purchased in 2010 for 100,000,000 krone,when the exchange rate was $0.132/krone. The current exchange rate is $0.163/krone. Under the temporal method,how should the translated amount of the restated asset be interpreted?

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Under the temporal method, the restated asset is translated at historical exchange rate, which was $0.132/krone in 2010. Therefore, the building purchase of 100,000,000 krone would have cost the U.S. parent $13,200,000 in 2010 ($0.132 x 100,000,000 krone). This means that the building's value in U.S. dollars has not changed, as the current exchange rate of $0.163/krone would result in a translated value of $16,300,000 ($0.163 x 100,000,000 krone), which is higher than the historical cost of $13,200,000.

A Danish Subsidiary of a U