does anyone have an easy way to remember these details? I get them wrong almost everytime. I am going to start "do the opposite" (much like George Constanza in Seinfeld)....作者: comp_sci_kid 时间: 2011-7-13 14:21
Temporal inventory will vary based upon LIFO/FIFO作者: SpyAli 时间: 2011-7-13 14:22
Fixed Assets PPE ->
Current Rate Method - Current Rate
Temporal Method -> Historic Rate
Depreciation:
Current Rate Method -> average
Temporal -> Historic
Inventory
Many variances/nuances here:
Current Rate
-----------------
End Inventory-> Current Rate (On B/S0
COGS -> on I/S -> Average Raet
Temporal Method (All nuances are here)
--------------------------------------------------
Ending Inventory -> Historic Rate (also depends on Flow assumption)
FIFO -> Latest inventory present in the End Inventory. So Historic Rate is actually the CURRENT Rate.
LIFO -> Old pieces are present in Ending Inventory. So Historic Rate is the real HISTORIC Rate.
Wt. Avg -> No issues here - use Wt. Avg Rate.
COGS
FIFO -> Old pieces have been used in COGS. So Historic Rate is the real HISTORIC Rate.
LIFO -> Latest inventory present in the COGS. So Historic Rate is actually the CURRENT Rate.
Wt. Avg -> No issues here - use Wt. Avg Rate.
CP作者: flyinggirl 时间: 2011-7-13 14:22
someone is missing something definitely. For temporal method, your measures for inventory will drive cogs rate. Mostly I've noticed a separate rate given for inventory.
All current is simple. Everything on balance sheet is current, except equity whose various components should measure up to current (though you value each component of equity differently). On Income statement everything is average.
For temporal method, everything that is monetary (assets and liabilities) are valued at current. For nonmentary assets and liabilities at historic or weighted average (whatever is applicable). Income statement primarily driven by average, however certain elements will be valued at the respective rate of their balance sheet equivalent.
Edited 1 time(s). Last edit at Sunday, May 23, 2010 at 11:39AM by sweftr.作者: ayodayo 时间: 2011-7-13 14:22
can you explain who is missing what? Are you referring to what I posted above?
and since when did Fixed assets drive COGS?
CP作者: YAhmed 时间: 2011-7-13 14:22
CPK, I made a little writing error. Inventory drives COGS. Fixed assets drive depreciation.作者: random_walker47 时间: 2011-7-13 14:22
and did I post anything wrong?
CP作者: redskins44 时间: 2011-7-13 14:22
COGS under temporal. Should be reversed.作者: smuggycfa 时间: 2011-7-13 14:22
do not think so.
FIFO - earliest piece of inventory is in COGS. So Historic Rate is the COGS rate.
LIFO - last pieces of inventory is in COGS -> so Historic Rate is the CURRENT rate.
pretty sure about this.
Please read the paragraph on pg 175 in the CFAI text ....
(3rd up from bottom of page)
CP作者: RepoToronto 时间: 2011-7-13 14:22
Cheers CP, btw did you not take the level 1 in 07? I remember we discussed much level 1 stuff back then?作者: defour44 时间: 2011-7-13 14:22
I've put a summary together based on my understanding of the instructions on page 175, vol2 of which rates to use when translating using temporal method, as it pertains to cost flow assumption. Can someone please advise if it's correct.
cpk123 Wrote:
-------------------------------------------------------
> Fixed Assets PPE ->
> Current Rate Method - Current Rate
> Temporal Method -> Historic Rate
>
> Depreciation:
> Current Rate Method -> average
> Temporal -> Historic
>
> Inventory
> Many variances/nuances here:
> Current Rate
> -----------------
> End Inventory-> Current Rate (On B/S0
> COGS -> on I/S -> Average Raet
>
> Temporal Method (All nuances are here)
> --------------------------------------------------
>
> Ending Inventory -> Historic Rate (also depends on
> Flow assumption)
> FIFO -> Latest inventory present in the End
> Inventory. So Historic Rate is actually the
> CURRENT Rate.
> LIFO -> Old pieces are present in Ending
> Inventory. So Historic Rate is the real HISTORIC
> Rate.
> Wt. Avg -> No issues here - use Wt. Avg Rate.
>
> COGS
> FIFO -> Old pieces have been used in COGS. So
> Historic Rate is the real HISTORIC Rate.
> LIFO -> Latest inventory present in the COGS. So
> Historic Rate is actually the CURRENT Rate.
> Wt. Avg -> No issues here - use Wt. Avg Rate.
CPK--Great summary. I agree totally. One additional point/comment. If we are given FIFO or LIFO assumption but are additionally told the inventory is purchased and sold evenly throughout the year, I think we are to use the average rate. It seems that his comment supersedes the FIFO/LFO assumption. I discovered this yesterday when doing Schweser Exam 1AM, and posted about it yesterday. Basically the average rate is used in question 16 although FIFO is given, because of the even purchase throughout the year.作者: yospaghetti 时间: 2011-7-13 14:22
i think this is a good post so im bumping...does anyone disagree with my last post?作者: zephyranalyst 时间: 2011-7-13 14:22
Well I just had a schweserpro question which asked
What rate do you use for inventory and COGS using LIFO under the temporal method.
Answer: Inventory and COGS should use historical rate.
Not getting the COGS answer.作者: ningning1984 时间: 2011-7-13 14:23
And I just did another problem using LIFO #87466 Problem 5
This time it uses AVG.作者: b_sea93 时间: 2011-7-13 14:23
bump on this--after a year of this i still am trying to figure out what to do with FIFO/LIFO + evenly purchased inventory throughout the year situation!
