Question #89
Reading: Reading 10 Multinational Operations
PDF File: Reading 10 Multinational Operations.pdf
Page: 50
Status: Unattempted
Correct Answer: B
Question
Under U.S. GAAP, the temporal method is preferred to the current rate method in hyperinflationary economies because the temporal method:
Answer Choices:
A. is easier to perform under hyperinflation
B. provides better conversions of subsidiary revenues
C. results in non-monetary asset values that are a better proxy for the economic values of those assets
Explanation
The temporal method results in non-monetary asset values that are a better proxy for the
economic values of those assets than those obtained under the current rate method. Both
methods convert revenues and SG&A at the average rate so there could be no clear
preference when considering these measures.