- 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
At the end of the accounting period the subsidiary reports the following trial balance:
Weighted average: 1SF=$1.64
December 31: 1SF=$1.62
The relevant exchange rates during the year are as follows:
January 1: 1SF=$1.71
Weighted average: 1SF=$1.64
December 31: 1SF=$1.62
Under the current method, reported sales for the subsidiary are
A. $25,000
B. $41,000
C. $40,500
Explanation: Sales are translated at the average exchange rate of $1.64 for a total of $41,000.
User Contributed Comments 4
| User | Comment |
|---|---|
| danlan2 | Always the average exchange rate, current method or temporal method. |
| volkovv | This is true for sales, since they occur throughout the year. But if you can identify a certain date for a certain income statement expense (i.e. Gain on Sale of Equipment) then you would use exchange rate on that date and not the weighted average. |
| malawyer | sure danlan, always use the same - this is why it's 2 methods ;-) |
| Hishy | I think he's just referring to sales |