Under U.S. GAAP, what method of translating foreign currency financial statements must be used for subsidiaries in highly inflationary economies?
A) Current rate method
B) Current/non-current method
C) Temporal method
D) Monetary/non-monetary method

Question

Quizplus · Accepted Answer

Under U.S. GAAP, subsidiaries in highly inflationary economies must use the temporal method for translating their financial statements. This method is used when the local currency is not the functional currency and involves the separation of monetary and non-monetary items and translation at historical or current exchange rates depending on the nature of the item.

Under US GAAP, What Method of Translating Foreign Currency Financial Statements