Under the temporal method which of the following is usually

Under the temporal method, which of the following is usually used to translate monetary amounts to the functional currency?

I. The current exchange rate

II. The historical exchange rate

III. Average exchange rate

Solution

Answer I. The current exchange rate. In Temporal Method of Translation - assets carried at historical cost and stockholders’ equity are translated at historical exchange rates; assets carried at current value and liabilities (carried at current value) are translated at the current exchange rate.