In the reading on multinational operations - for translation in hyper inflationary environments.
Example 7: Under the current method, after restating according to inflation, capital stock has also been converted under the current exchange rate. Why is this so? Shouldn’t this be converted according to historical exchange rates?
Same treatment has been done under the temporal method also. Can someone explain why this is so?
Under IFRS, the foreign currency financial statements are first restated for inflation and then translated using the current rate method.
Based on current rate method, the equity part should use historical rate.
page 267 show 1.00H for Capital stock (using Historical rate for Capital stock).
Thanks. So, is that a mistake in the book then? The part where they have used the current exchange rate for converting capital stock?