Question

A French company has a subsidiary in Argentina, which is designated as a highly inflationary country. The subsidiary's functional currency is the Argentine peso. The subsidiary reports land on its books at cost, 25,000 pesos. The price level index was 200 when the land was purchased and is 1,200 now. The €/peso rate was €0.05 when the land was purchased and is €0.008 now.

At what amount, in euros, is the land reported using U.S. GAAP and IFRS?

U.S. GAAP

IFRS

A.

€1,200

€2,400

B.

€1,250

€1,200

C.

€1,200

€ 200

D.

€1,200

€1,250

Answer 1

Correct option is B.

Please find below table useful to compute desired results: -

End results would be as follows: -