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Answer: historical exchange rates with gains and losses from translation reported on the income statement.
## Explanation When the functional currency is the same as the parent's presentation currency, the **temporal method** is used for translation. Under the temporal method: - **PP&E (Property, Plant & Equipment)** is a non-monetary asset carried at historical cost, so it is translated at **historical exchange rates** - Translation gains and losses are reported on the **income statement** This differs from the current rate method where: - All assets are translated at current rates - Translation gains/losses go to equity (OCI) Therefore, the correct answer is **C**: historical exchange rates with gains and losses from translation reported on the income statement.
Author: LeetQuiz Editorial Team
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A foreign subsidiary's functional currency is the parent company's presentation currency. The subsidiary's PP&E will be translated at:
A
current exchange rates with gains and losses from translation reported in the equity section.
B
current exchange rates with gains and losses from translation reported on the income statement.
C
historical exchange rates with gains and losses from translation reported on the income statement.
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