Understanding the Temporal Method of Translation

Easy Multinational Operations Translation Methods

ABC Corporation is a multinational company that operates in several countries. The company has significant operations in the Eurozone, where it generates revenue in euros. As part of its financial reporting, ABC Corporation needs to translate its euro-denominated financial statements into its reporting currency, which is US dollars. One of the methods it can use for translating its financial statements is the temporal method.

Which of the following statements correctly describes the use of the temporal method for translating financial statements?

Under the temporal method, monetary assets and liabilities are translated using the current exchange rate, while non-monetary assets are translated at historical exchange rates.

The temporal method translates all assets and liabilities at the historic exchange rate to reflect their original cost.

Under this method, all revenues and expenses are translated at the average exchange rate for the reporting period.

Hint

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