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CFAI Sample 2 - AC translation
For anyone who has done question 11 in CFAI Sample 2,
can you please explain why we couldn’t have translated Kerwin’s Equity using current exchange rate like the way it is done in the books?
Question 11
If the Swedish krona is chosen as kerwin’s functional currency, Kerwin’s 2008 return on equity ratio after translation will be closest to xxx.
Answer: Translate Equity using historical rate on the date the company was acquired by parent.
I thought that if asset and liability were translated using current rate under all current method, it only makes sense to have Equity translated at current rate too. Also I don’t remember reading about any exceptions that state if the subsidiary is acquired on certain date, its asset, liability or equity need to be translated at non current rates.
Can someone please confirm? |
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发表于 2013-4-7 03:39
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