标题: translation gain and loss [打印本页] 作者: Kapie 时间: 2011-7-11 20:03 标题: translation gain and loss
does translation gain or loss have anything to do with currency appreciation/deppreciation?
for example, if under current method, a gain happen and the local currency is depreciation, is it a translation loss?
if under temporal method, a loss happen and local currency is deppreciating, is it a translation gain? Thanks.作者: KungFuPanda 时间: 2011-7-11 20:03
wow! i never saw it like that???作者: ap0258 时间: 2011-7-11 20:03
It depends on your exposure:
1. Under the current method, your exposure is your equity (A-L) which is usually positive.
2. Under the temporal method, your exposure is your monetary assets minus your monetary liabilities.
A net asset exposure in both situations combined with an appreciating currency leads to a gain.
NO EXCUSES作者: scarecrow 时间: 2011-7-11 20:03
are you taking the cfa exam hw0799?作者: Uranus08 时间: 2011-7-11 20:03
Does mean-varaiance analysis have anything to do with the Portfolio Management section?作者: chandsingh 时间: 2011-7-11 20:03
does depreciation have anything to do with buying an asset?作者: Houjichasan 时间: 2011-7-11 20:03
Wow, 30 seconds of my life I will never have back......I know, I know, that's what she said.作者: b_sea93 时间: 2011-7-11 20:03
1. temporal ( currency risk exposure is only for monetary assets and liabilities)
if you have a net monetary asset position in the foregn currency a depreciating foregn currency will result in a loss
for net monetary liability you want the foreign currency to depreciate because you will post a gain in translation.
results in translation gain or loss in the income statement
2. current rate ( all assets and liabilities are exposed )
A- L= Equity
usually positive
so it should usually be a gain when currency appreciates and a loss when it depreciates
results in cumulative translation adjustment in OCI
