Which of the following best describes the measurement of a gain or loss from the sale of a depreciable asset by a foreign subsidiary whose functional currency is not the local currency?
A)Reconstruct the journal entry on the date of the sale using the historical rate for cash and the depreciable asset and its accumulated depreciation.
B)Reconstruct the journal entry on the date of the sale using the current rate for cash and the historical rate for the depreciable asset and its accumulated depreciation.
C)Translate the gain or loss using the historical rate.
D)Translate gains at the current rate and losses at the historical rate.

Question

Which of the following best describes the measurement of a gain or loss from the sale of a depreciable asset by a foreign subsidiary whose functional currency is not the local currency?
A)​Reconstruct the journal entry on the date of the sale using the historical rate for cash and the depreciable asset and its accumulated depreciation.
B)​Reconstruct the journal entry on the date of the sale using the current rate for cash and the historical rate for the depreciable asset and its accumulated depreciation.
C)​Translate the gain or loss using the historical rate.
D)​Translate gains at the current rate and losses at the historical rate.

Quizplus · Accepted Answer

The historical rate should be used to translate the depreciable asset and its accumulated depreciation because they are historical costs. The current rate should be used to translate the cash because it is a current asset.

Which of the Following Best Describes the Measurement of a Gain