Question #55

Reading: Reading 10 Multinational Operations

PDF File: Reading 10 Multinational Operations.pdf

Page: 31

Status: Unattempted

Part of Context Group: Q54-55
Shared Context
- If Wilson assumes the numbers in Exhibit 2 are correct, the remeasurement gain/loss for 20X8 will be closest to: A) £285. B) –£77. C) £1,012.
Question
Which of the following statements regarding the treatment of subsidiaries in a hyper- inflationary environment under U.S. GAAP is most likely correct?
Answer Choices:
A. The subsidiary should be translated using the temporal method regardless of the level of autonomy, and then no further restatement is required
B. The subsidiary should be translated using the temporal method regardless of the level of autonomy, and non-monetary items restated for the effect of local inflation
C. The subsidiary should be translated using the current rate method regardless of the level of autonomy, and non-monetary items restated for the effect of local inflation
Explanation
U.S. GAAP requires the use of the temporal method.
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