What is the concept of current rate method of translation and temporal method of translation? How does balance sheet exposure differ under these two methods?
The 2010 financial statement of Child Co. Inc (Mexico), a subsidiary of Parent Co. Inc (United States), reveals the following information:
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Beginning Inventory
Peso 100,000
Purchases
Peso 500,000
Ending Inventory
Peso 150,000
COGS
Peso 450,000
US dollar exchange rate for 1 Peso:
January 1, 2010
$0.45