这题

问题如下：

The net income or loss (in thousands) from the Val Blanc subsidiary that was included in Nation’s income for 2010 is closest to:

选项：

A.–$957. B.–$961. C.–$791.

解释：

Solution

A is correct. The functional currency for the Val Blanc subsidiary is the euro because the resort operates independently and attracts European tourists. The prices are set in euros, and the resort is also financed in euros. Therefore, the financial statements would be translated using the current rate method. Under the current rate method, the net earnings (loss) is calculated using the average rate for the July–December 2010 period: €725 thousand loss × $1.3198/€1 = –$957 thousand.

C is incorrect. It incorrectly converts deprecation at the historical rate (which is the temporal method).

B is incorrect. It uses the year-end rate instead of the average rate (725) × 1.3261 = (961). Also, if one uses the average rate for the year instead of for just the 6 months, 725 × 1.3277 = 962.6, which is close to 961.