highly inflationary environment: foreign subsidiary's gains and losses in the income statement

Assume the country where a foreign subsidiary is operating has been experiencing 30% annual inflation over the past three years.

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The temporal method is required if the foreign subsidiary is operating in a highly inflationary environment, defined as cumulative inflation of more than 100% in a 3-year period.

(1+30%)^3 - 1 = 120%

highly inflationary environment: foreign subsidiary's gains and losses in the income statement

		U.S.GAAP	U.S.GAAP
Accounting		temporal	temporal
Remeasurement gains and losses		I/S	I/S
subsidiary's net monetary asset/liability		liability	asset
foreign currency		depreciating	depreciating
Income statement		gain	loss