Measuing receivable using temporal method??

CFA Level II FRA
#1

Q.113 Schweser Mock Exam vol 1; Exam 2 afternoon:

A owns B. A is in USA, B is in Foreign country. B’s local management make decisons hence B’s currency is functional currency. However B has receivable from Country C recorded in currency C. The Question is how do you translate the receivables from Country C in B’s accounts.

Answer is temporal method- translate C receivalbes into B currency. This cant be right.

Receivables are monetary assets and hence always translated at closing/current rate - thats my thinking. Any takers…

#2

Temporal method has to be used when translating INTO the functional currency. Receivables are translated via current rate, however, under temporal AND current rate method.

#3

Thanks Mission2014 - thats a cleaver way of looking at this…