Question

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the functional currency is the local currency of a foreign subsidiary what exchange rates should be used to translate the hyperinflation over three years below the foreign b oys country which has not expenced Expense-Equipment eeee o 0 Option o O OD o o O Opson A

Answer 1

Option C is the correct Answer.

As per SIC-30 , enterprise translates the financial statements from a measurement currency to a presentation currency. In hyperinflationary economy, the requirements of SIC-19.9 are

• assets and liabilities for all balance sheets presented are translated at the closing rate existing at the date of each balance sheet presented (closing rate). In the question Equipment and Inventory are assets hence current rate.
• income and expense items are translated at the exchange rates existing at the dates of the transactions. i.e Historic rate. In the question depreciation is an expense. Hence historic rate