Curriculum Book-Financial Reporting & Analysis Page 463. Q18

Hello All

Can any body explain me why the answer used current exchange rate (1.62) instead of avg exchange rate (1.55)

We learned “temporal method” and “current method concept”. Both method require a historical rate to translate EQUITY.

As there was not historical rate, we should use avg rate. What do you guys think of my opinion?

Thank you

I think it is because you only use one of te two FX translation methods when you prepare consolidated financials. They are using the equity method in this example

You are trying to identify the value now (snap shot), so you need to use current rate and not average.