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Nonmonetary assets and liabilities

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Nonmonetary assets and liabilities


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When a country becomes highly inflationary, the accounting is as follows: Nonmonetary assets and liabilities (for example, fixed assets and the related accumulated depreciation) are remeasured from the local currency to the reporting currency (the new functional currency) at historical exchange rates.
The difference between current and historical rate translations of nonmonetary assets and liabilities will continue to be a temprorary difference on which deferred foreign taxes must be provided.
 
 
 
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