However, by the consolidation date, the Saudi Arabian riyal depreciates such that the new spot rate is

$1.00 = SAR4.125.

Required:

a. Assuming no transactions took place before consolidation, what would be the translation gain or loss if Armaselah’s balance sheet were translated to dollars by the temporal rate method?

b. How does the translation adjustment affect MSC’s cash flows?

c. What adjustments to Armaselah’s accounts would you make to enable you to compare its financial statements with another company of comparable size in the same industry that is employing the current rate translation method per IAS 21?