On page 266 of the FRA curriculum volume 2, in the solutions section it shows the restatement factor of revenue as “200/125.” Does anybody know why that is? It is really bugging me.
Thanks
inflation factor?
It is adjusting the Financial Statement for inflation (IFRS) which requires you to adjust for inflation then translate using the Current Rate Method:
If you notice that the line items in the financials that are converted on balance sheet date uses the inflation to balance sheet date as an adjustment factor. Line items that use average, e.g., Revenues, COGS, will be using the average adjustment factor. Items that are booked at historical are adjusted using the historical adjustment factor.
U.S. GAAP does not adjust for inflation and translates using Temporal.
Hope this helps