REFERENCE: Ref.10_05
A subsidiary of Porter Inc. ,a U.S.company,was located in a foreign country.The functional currency of this subsidiary was the stickle (§).The subsidiary acquired inventory on credit on November 1,2008,for §120,000 that was sold on January 17,2009 for §156,000.The subsidiary paid for the inventory on January 31,2009.Currency exchange rates between the dollar and the stickle were as follows:

-Under the temporal method,common stock would be restated at what rate?

Question

REFERENCE: Ref.10_05
A subsidiary of Porter Inc. ,a U.S.company,was located in a foreign country.The functional currency of this subsidiary was the stickle (§).The subsidiary acquired inventory on credit on November 1,2008,for §120,000 that was sold on January 17,2009 for §156,000.The subsidiary paid for the inventory on January 31,2009.Currency exchange rates between the dollar and the stickle were as follows:
 
-Under the temporal method,common stock would be restated at what rate?

Quizplus · Accepted Answer

According to the temporal method, monetary assets and liabilities, including accounts payable for purchases, are translated at the current exchange rate at the balance sheet date, while non-monetary assets and liabilities are translated at historical exchange rates. Since common stock is a non-monetary item, it should be restated at the historical rate, which is the rate in effect at the date the stock was issued. Therefore, the answer is D, historical rate.

REFERENCE: Ref.10_05 a Subsidiary of Porter Inc. ,A U.S.company,was Located in a in a Foreign