Answer-first summary for fast verification
Answer: A lower reported assets.
## Explanation Under the **temporal method**: - Monetary assets and liabilities are translated at the current exchange rate - Non-monetary assets are translated at historical exchange rates Since the foreign currency has **consistently depreciated**: - **Assets** (which include non-monetary items) would be translated at historical rates (higher rates) under temporal method - **Liabilities** (monetary items) would be translated at current rates (lower rates) under temporal method Compared to current rate method (where all assets and liabilities use current rate): - **Assets** would be lower under temporal method because non-monetary assets use historical (higher) rates - **Liabilities** would be lower under temporal method because monetary liabilities use current (lower) rates Therefore, the temporal method most likely results in **lower reported assets** compared to the current rate method.
Author: LeetQuiz Editorial Team
Ultimate access to all questions.
The foreign currency of a subsidiary has consistently depreciated against the parent's presentation currency. The subsidiary does not have any non-monetary liabilities, but does have long-term debt issued five years ago. Compared to the current rate method, the temporal method of translation most likely results in:
A
A lower reported assets.
B
B higher reported equity.
C
C higher reported liabilities.
No comments yet.