CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Which of the following statements about the translation and remeasurement processes is true?
A. The reported balance of inventory is usually the same under both methods.
B. The reported balance of equipment/depreciation is usually the same under both methods.
C. The reported balance of sales is usually the same under both methods.
Explanation: Revenues are translated at average exchange rates under both methods. Balance sheet items (and their related expenses, e.g., COGS and depreciation) are translated differently under the current rate and temporal methods.

User Contributed Comments 8

User Comment
ejl222 A and C are the same answer.
lockedin No. Inventories are translated/remeasured differently under both methods.
danlan2 Inventory can be LIFO/FIFO, FIFO can be different for two methods.
ThePessimist Even if they're both LIFO, translation will report the value of inventory at current exchange rate, while remeasurement will report at historical exchange rates.
ostrich Please don't forget there is also LCM and Average Cost in addition to LIFO/FIFO.
bhmcfa What are they referring to by "translation...process?" "Remeasurement" is referring to the temporal method, correct? But what is the comparison to?
gaurav1207 Inventory is not a monetary asset and hence translated at historical cost under temporal method...whereas it is translated at current cost under all current
Swoods2 "balance" in reference to sales sounds strange
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