Currency Translation Pop Quiz for Hot Shots example, one

d2rockstar

You are given three rates (No blended rates in this example):
1. Current
2. Average
3. Historical

For both All Current and Temporal which one do you use for:
1. Fixed Assets (PPE)
2. Depreciation
3. Inventory

ap0258

Current: All current
Temporal: All historical
?

smuggycfa

All Current
Fixed Assets - Current
Depreciation - Average
Inventory - Current

Temporal
Fixed Assets - Historic
Depreciation - Historic
Inventory - Historic

sameeragarwal

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)....

comp_sci_kid

Temporal inventory will vary based upon LIFO/FIFO

SpyAli

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

flyinggirl

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.

ayodayo

can you explain who is missing what? Are you referring to what I posted above?

and since when did Fixed assets drive COGS?

CP

YAhmed

CPK, I made a little writing error. Inventory drives COGS. Fixed assets drive depreciation.

random_walker47

and did I post anything wrong?

CP