CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

A US-based company has a subsidiary located in Germany. The Euro is the functional currency of the subsidiary. What exchange rate should be used to translate the following items reported in the subsidiary's year-end financial statements?

Inventory - Machinery - Depreciation.

A. Current rate - Current rate - Average rate.
B. Historical rate - Current rate - Current rate.
C. Current rate - Historical rate - Average rate.
Correct Answer: A

User Contributed Comments 3

User Comment
tkorchmaros use current exchange rate on all assets and liabilities.
use the average rate to translate the income statement
danlan2 Historical is used for exchanged rate, temporal method versus all-current method, historical rate is more used in temporal method.
jmcarr02 Instead of the average rate applied to the depreciation you could also have used the historical rate. Both rates accepted.
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