Which of the following is a limitation of using the temporal method for translating foreign currency financial statements?
A) The translated asset and liability amounts have no meaningful interpretation.
B) The translation adjustment will usually have a negative impact on income.
C) Financial ratios after translation will be distorted.
D) All of the above are limitations of the temporal method.

Question

Quizplus · Accepted Answer

The temporal method can distort financial ratios after translation because it uses historical exchange rates for some assets and liabilities, leading to inconsistencies in translated values.

Which of the Following Is a Limitation of Using the Temporal