in the temporal method, is the currency trans gain/loss reported before tax, or net of tax on the income statement? showing me a typical format of that would be nice
1. It's recorded Pre-Tax
2. There is not specific place where it is required to be disclosed (both under IFRS or US.GAAP), some companies disclosed as part of SGA, some unders COGS
oooh yeah, I remember an EOC question about that; it asked you something about whether and how the Gross profit margin, operating profit margin, and net profit margin would be affected by the firm's decision to consider it an SGA or CoGS item... it's all coming back now
I've looked and I've looked in CFA text for what you say about this treatment, and it doesn't say what you're telling me anywhere with respect to the currency trans adjustment; what it does show is several examples with the following:
Income b4 translation $XXX
translation gain/loss $XXX
Net Income $XXX
So I'm inclined to say this is how it's done... anyone else care to give their two cents?
Yeah, the CTA is a cumulative balance sheet item in current rate method, but I'm comfortable with that one. What I'm talking about the single period translation gain/loss that you use in the temporal method to adjust net income so that the following balances:
REend = REbeg + NI - Div
You need to adjust NI, cuz it won't balance this equation when you straight up do the income statement translation at the weighted average (as you're supposed to for temporal method). my question is how you show the translation gain or loss in the income statement. In the CFA text, it shows it like this:
Income b4 translation $XXX
translation gain/loss $XXX
Net Income $XXX
and buddy from above is saying it goes under either of CoGS or SG&A, and I'm very skeptical about that perspective since I can't find that in the text, and examples are laid out in the way I've shown here.
Edited 1 time(s). Last edit at Thursday, March 24, 2011 at 10:41AM by magicskyfairy.
I have been through the EOC and I didnt see any question asking if the remeasurement g/(l) ends up in SG&A or COGS.
My answer is it doesnt go in either - it just sits between Net Income before and after remeasurement
Net income before Remeasurement (from NI)
Remeasurement gain/loss (plug)
Net Income after Remeasurement (from RE) [REend = REbeg + NI - Div ]
As long as you can get to the right answer for gain/loss with the above method, I dont think the format or the tax implication is material
Remeasurement Gain or Loss is a plug figure to Net Income that forces the Beginning Retained Earnings balance plus Net Income less Dividends to equal Ending Retained Earnings.
发表于 2011-7-11 19:22
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