Under the temporal method, at what exchange rate is depreciation expense translated?
A)At the average rate for the year
B)At the historical rate when the related assets were acquired
C)At the closing rate
D)At the rate at the beginning of the fiscal period

Question

Quizplus · Accepted Answer

Under the temporal method, depreciation expense is translated at the historical rate when the related assets were acquired. This rate is used because it reflects the exchange rate in effect at the time the assets were purchased, which is when the company committed to the future cash flows associated with the asset. This means that the cost of the asset should be translated at the historical rate and then depreciated based on the company's estimates of useful life and residual value.

Under the Temporal Method, at What Exchange Rate Is Depreciation