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Basic Question 3 of 6
Which of the following statements about the current rate method of foreign currency translation is (are) correct?
II. It emphasizes the presentation currency aspects of a foreign investee's operations.
III. It requires use of the current exchange rate for translating all financial statement amounts of the foreign investee.
I. It is generally accepted in the United States.
II. It emphasizes the presentation currency aspects of a foreign investee's operations.
III. It requires use of the current exchange rate for translating all financial statement amounts of the foreign investee.
User Contributed Comments 3
| User | Comment |
|---|---|
| mysking | why not ii? |
| jmcarr02 | Not II) because the foreign investee operates with a 'functional currency' not a 'reporting currency' which is the currency of the investor, not the investee. |
| davidt876 | II = temporal method |
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Learning Outcome Statements
compare the current rate method and the temporal method, evaluate how each affects the parent company's balance sheet and income statement, and determine which method is appropriate in various scenarios;
calculate the translation effects and evaluate the translation of a subsidiary's balance sheet and income statement into the parent company's presentation currency;
CFA® 2025 Level II Curriculum, Volume 2, Module 12.