Vidyalelo
Management · Q37

International Finance and Treasury

Graduate and Post Graduate · Management · question 37

Q37

This is not established method of translation

A.
Current rate method
B.
Monetary/Non-monetary method
C.
Temporary method
Answer
D.
Current/Non-current method

Answer: Option C

Solution

Answer: Option C
Solution:
Temporary method is not established method of translation. Temporal rate method, or the historical rate method, is employed to convert the financial statements of a parent company’s foreign subsidiaries from its local currency to its “reporting” or “functional” currency when the functional currency and the local currency are not the same. Temporal Method is also utilized at the time of acquisition of assets and liabilities.