Explanation

US GAAP Requirements for Hyperinflationary Economies:

1. Under US GAAP, when a subsidiary operates in a hyperinflationary economy:

   • Financial statements must first be restated for local inflation using the general price-level index
   • After inflation adjustment, the temporal method is used to translate the financial statements into the parent's reporting currency

2. Key differences from normal translation:

   • Normal scenario: Current rate method is typically used for foreign subsidiaries
   • Hyperinflationary scenario: Temporal method is required after inflation restatement

3. Rationale:

   • Hyperinflation distorts the economic reality of financial statements
   • Inflation restatement preserves the purchasing power of local currency amounts
   • Temporal method then provides a more meaningful translation into the parent's currency

Therefore, Mandel Corp. must use the temporal method after restating them for inflation.