Facts:

• U.K. subsidiary had identical sales revenue in 20X1 & 20X2
• U.K. subsidiary had 25% gross profit margin in 20X1 & 20X2
• U.K. subsidiary accounts for inventory using FIFO
• GBP rising against USD throughout 20X1 & 20X2

Question:

• Using thecurrent rate methodto translate the 20X2 British subsidiary's financial statements into U.S. dollars
• Using thetemporal rate methodto translate the 20X2 British subsidiary's financial statements into U.S. dollars
• Is the U.S. dollar gross profit margin higher or lower than the GBP gross profit margin in 20X2 when using current rate and/or temporal rate method.
• How do these compare to each other? Do they differ?