Hann Company is a U.S. multinational firm with operations in several foreign countries. Hann has a 100 percent stake in a French subsidiary. The foreign subsidiary's local currency has appreciated against the U.S. dollar over the latest financial statement reporting period. In addition, the French firm accounts for inventories using the FIFO inventory cost-flow assumption. The net profit margin as computed under the current rate method would most likely be:
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A) |
either higher or lower than the same ratio computed under the temporal method. | |
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B) |
lower than the same ratio computed under the temporal method. | |
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C) |
higher than the same ratio computed under the temporal method. | |
The foreign currency gain or loss appears on the income statement under the temporal method. Hence, to make any determinations regarding the movements of this ratio, we need more information regarding the net monetary asset or liability position as of both the beginning and ending balance sheet date.
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发表于 2010-4-14 15:59
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