标题: temporal vs. current [打印本页] 作者: SkipE99 时间: 2011-7-13 16:15 标题: temporal vs. current
Do firms get to pick which one to use?作者: chaojimali 时间: 2011-7-13 16:15
It depends on the currency being used for the subsidiary
If autonomous, then use current
If highly dependent on parent, then use temporal作者: wizofoz 时间: 2011-7-13 16:15
thank you for that answer, and here's a follow-up:
how are assets and liabilities remeasured under temporal?作者: yalo 时间: 2011-7-13 16:15
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.作者: hassan 时间: 2011-7-13 16:15
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
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.作者: firat 时间: 2011-7-13 16:15
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.
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.作者: ninja1024 时间: 2011-7-13 16:15
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.
