2010 CFAI mock afternoon

CFA Level II
#1

question 29, in current method, why the equity is translated with the current end-of-year exchange rate? I thought equity should be translated with the old rate, is that right?

#2

Hi,

Please refer to page 274 vol 2 of curriculum.

  1. All assets and liabilities are translated at the current exchange rate at the balance sheet date.

Comments: Since total assets and liabilities are translated at the current rate. The total equity (equity taken as a whole) would then have to be translated at the current rate for the balance sheet to balance.

  1. Stockholder’s equity accounts are translated at historical rates (I think you are refering to this statement, and you are right, for Stockholder’s equity, an item within total equity).
#3

thanks for the reply