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SkipE99

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tT
发表于 2011-7-13 16:15 | 只看该作者

temporal vs. current

current
Do firms get to pick which one to use?
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chaojimali

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2#
发表于 2011-7-13 16:15 | 只看该作者
It depends on the currency being used for the subsidiary
If autonomous, then use current
If highly dependent on parent, then use temporal

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wizofoz

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3#
发表于 2011-7-13 16:15 | 只看该作者
thank you for that answer, and here's a follow-up:

how are assets and liabilities remeasured under temporal?

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yalo

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4#
发表于 2011-7-13 16:15 | 只看该作者
No...

Remember

P - Presentation Currency (think Parent company)
F - Functional Currency (main form of business)
L - Local (where the sub is located)

If F & L are same, you translate using Current from L/F -> P
If P & F are same, you remeasure using Temporal from L -> P/F
If F / P / L are all different, you use both Current & Temporal. Temportal from L to F. Current from F to P.



Edited 1 time(s). Last edit at Thursday, June 2, 2011 at 05:31PM by yabbadabbadoo.

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hassan

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5#
发表于 2011-7-13 16:15 | 只看该作者
It depends on if they are monetary or non-monetary. Under the temporal method you remeasure monetary a+l at the current rate and all non-monetary a+l at the historical

Monetary Assets: Cash, AR, Marketable Securities
Non-Monetary Assets: Inventory, PPE, Intangibles

Monetary Liabilities: AP, NP, LTD
Non-Monetary Liabilities: unearned revenue

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redskins44

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6#
发表于 2011-7-13 16:15 | 只看该作者
Chuckrox8 Wrote:
-------------------------------------------------------
> It depends on if they are monetary or
> non-monetary. Under the temporal method you
> remeasure monetary a+l at the current rate and all
> non-monetary a+l at the historical
>
> Monetary Assets: Cash, AR, Marketable Securities
> Non-Monetary Assets: Inventory, PPE, Intangibles
>
> Monetary Liabilities: AP, NP, LTD
> Non-Monetary Liabilities: unearned revenue


Thank you; I will pray for you to pass in English, French, and Turkish.

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firat

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7#
发表于 2011-7-13 16:15 | 只看该作者
To make your life simple, tell yourself this;

REGARDLESS of method, they all use these same rules:

Assets & Liability - Current Rate
Equity - Historical Rate

Revenues - Average
Expenses - Average

This intuitively makes sense, Revenues & Expenses occur throughout the year so you want to reflect the Average Rate. Equity should be recorded when the transaction took place. And B/S accounts should reflect the reporting period.

The only EXCEPTION is Temporal applies HISTORICAL rates to NON-MONETARY B/S items & expenses.

B/S include: inventory, PP&E, intangibles, defferred rev, etc
Expenses include: COGS, D&A

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economicz

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8#
发表于 2011-7-13 16:15 | 只看该作者
Equity under the current method is a little funky. ALL Equity is translated at the current rate, but the individual components excluding RE are translated at the historical rate. The difference is the CTA.



Edited 1 time(s). Last edit at Thursday, June 2, 2011 at 05:42PM by Chuckrox8.

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ninja1024

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9#
发表于 2011-7-13 16:15 | 只看该作者
Also, make sure you READ the vignette in detail! The rules given to us only apply if they do not tell us anything different. Sometimes they will give you certain rates (i.e. avg inventory rate or historical PPE acquisition rate) in addition to the current, average, and historical. Use the rates they give you and forget the rules if this happens.

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