lower of cost and market rule

问题如下：

Triofind, Inc. (Triofind), based in the country of Norvolt, provides wireless services to various countries, including Norvolt, Borliand, Abuelio, and Certait. The company’s presentation currency is the Norvolt euro (NER), and Triofind complies with IFRS. Triofind has two wholly owned subsidiaries, located in Borliand and Abuelio. The Borliand subsidiary (Triofind-B) was established on 30 June 2016, by Triofind both investing NER1,000,000, which was converted into Borliand dollars (BRD), and borrowing an additional BRD500,000.

Marie Janssen, a financial analyst in Triofind’s Norvolt headquarters office, translates Triofind-B’s financial statements using the temporal method. Non-monetary assets are measured at cost under the lower of cost or market rule. Spot BRD/NER exchange rates are presented in Exhibit 1, and the balance sheet for Triofind-B is presented in Exhibit 2.

Janssen next analyzes Triofind’s Abuelio subsidiary (Triofind-A), which uses the current rate method to translate its results into Norvolt euros. Triofind-A, which prices its goods in Abuelio pesos (ABP), sells mobile phones to a customer in Certait on 31 May 2017 and receives payment of 1 million Certait rand (CRD) on 31 July 2017.

On 31 May 2017, Triofind-A also received NER50,000 from Triofind and used the funds to purchase a new warehouse in Abuelio. Janssen translates the financial statements of Triofind-A as of 31 July 2017 and must determine the appropriate value for the warehouse in Triofind’s presentation currency. She observes that the cumulative Abuelio inflation rate exceeded 100% from 2015 to 2017. Spot exchange rates and inflation data are presented in Exhibit 3.

Janssen gathers corporate tax rate data and company disclosure information to include in Triofind’s annual report. She determines that the corporate tax rates for Abuelio, Norvolt, and Borliand are 35%, 34%, and 0%, respectively, and that Norvolt exempts the non-domestic income of multinationals from taxation. Triofind-B constitutes 25% of Triofind’s net income, and Triofind-A constitutes 15%. Janssen also gathers data on components of net sales growth in different countries, presented in Exhibit 4.

Based on Exhibits 1 and 2 and Janssen’s translation method, total assets for Triofind-B translated into Triofind’s presentation currency as of 31 December 2016 are closest to:

选项：

A.

NER1,375,000.

B.

NER1,380,252.

C.

NER1,434,783.

解释：

B is correct.

Using the temporal method, monetary assets (i.e., cash) are translated using the current exchange rate (as of 31 December 2016) of BRD1.20/NER (or NER0.8333/BRD), and non-monetary assets are translated using the historical exchange rate when acquired. Inventory is translated at its 2016 weighted-average rate of BRD1.19/NER (or NER0.8403/BRD). Therefore, the total assets for Triofind-B translated into Norvolt euros (Triofind’s presentation currency) as of 31 December 2016 are calculated as follows:

考点：temporal method

解析：temporal method下，monetary asset使用current rate转换，non-monetary asset使用购买时的历史汇率转换。子公司B的asset只有cash和inventory两项，cash使用汇率1.20BRD/NER，转换后为900,000/1.20=750,000NER。

存货为Non-monetary asset，用存货取得时候的历史汇率转换。由于存货在一年内可能多次购买，因此题目给了一个2016年存货购买的平均历史汇率1.19 BRD/NER。存货转换后为750,000/1.19=630,252NER，total asset=750,000+630,252=1,380,252NER。