- CFA Exams
- CFA Level I Exam
- Study Session 5. Financial Reporting and Analysis (1)
- Reading 15. Multinational Operations
- Subject 4. Translation: The All-Current Method
CFA Practice Question
Jemco, Inc. used the current rate method for translating foreign currency amounts on December 31, 2008. On that date, Jemco had foreign subsidiaries with 1,500,000 local currency units (LCU) in long-term receivables and LCU2,400,000 in long-term debt. The exchange rate in effect when the specific transactions occurred involving those foreign currency amounts was LCU2 to $1. The exchange rate in effect on December 31, 2008, was LCU1.5 to $1. The translation of the foregoing foreign currency amounts to U.S. dollars on December 31, 2008, results in long-term receivables and long-term debt, respectively of:
A. $750,000 to $1,200,000.
B. $1,000,000 to $1,200,000.
C. $1,000,000 to $1,600,000.
User Contributed Comments 3
| User | Comment |
|---|---|
| danlan2 | Current rate is LCU1.5 to $1, i.e: $1000000 to $1600000. |
| MattNYC | both should be translated at the current rate under the current method |
| dblueroom | take the reciprocal and get the LC in the demoninator. |