Question

Which one of the following items normally is translated the same way under both the current rate and temporal methods of translation?

a) Cash and cash equivalents
b) Inventory
c) Property, plant, and equipment
d) Accounts receivable

Answer 1

Cash and cash equivalents are translated the same way under both the current rate and temporal methods because they are a liquid asset that reflects current market value on the balance sheet.

Step-by-step explanation:

The student asked which item is translated the same way under both the current rate and temporal methods of translation. The answer to this question is cash and cash equivalents. These are considered an asset and are translated at the current exchange rate under both methods because they represent currency that is ready to use and thus reflects the current market value in a balance sheet. The translation of cash and cash equivalents is straightforward due to their liquidity and the lack of related historical cost considerations, which is why they are consistently translated across both translation methods.