Which of the following statements is correct?
A)If an organization is self-sustaining,non-monetary items recorded at cost must be translated using historical rates.
B)If an organization is self-sustaining,non-monetary items recorded at cost must be translated using average rates.
C)If an organization is self-sustaining,non-monetary items recorded at cost must be translated using closing rates.
D)If an organization is considered an integrated foreign subsidiary non-monetary items recorded at cost must be translated using closing rates.

Question

Quizplus · Accepted Answer

If an organization is self-sustaining, non-monetary items recorded at cost must be translated using closing rates. Closing rates represent the exchange rate at the balance sheet date and are used to translate all non-monetary items. This is in line with the principles of the current rate method of translation, which requires that all assets and liabilities be translated using the exchange rate at the balance sheet date. Choice A, B, and D are incorrect because they do not reflect the requirements of the current rate method for translating non-monetary items.

Which of the Following Statements Is Correct