Rasec

tiredofstudying Wrote:
-------------------------------------------------------
> I think I see where his question comes
> from...let's say we are asked to translate Net
> Fixed Assets under Temporal or Current.
>
> You bought first $1000 of Fixed Assets when rate
> was 0.5
> Bought remaining $500 of Fixed Assets when rate
> was 0.6
> Current Rate is 0.7
>
> Balance Sheet:
> Fixed Assets = $1500
> Accumulated Depreciation = $245
> Net Fixed Assets = $1295
>
> Current Method:
> Simple - just translate Net Fixed Assets at 0.7
>
> Temporal Method:
> Not as clear cut. If the question is something
> like interpreting formula's, then you can discern
> from pattern of exchange rates that Net Fixed
> Assets under Temporal would be lower, therefore
> ratio like Fixed Asset Turnover would be higher.
> But what if they ask for the precise Net Fixed
> Assets under Temporal?
>
> My logic - allocate accumulated depreciation
> proportionally to the two purchases of Fixed
> Assets. Therefore,
>
> First purchase acc. depreciation =
> (1000/1500)*(245) = $163
> First purchase net fixed asset = 1000 - 163 = 837
> Temporal translation first purchase = 837 * 0.5
> Similarly for second purchase...and then add both
> of them up for Net Fixed Asset under Temporal
> Method.
>
>
> Disclaimer: This is an educated guess for the
> approach. not sure if its right - anyone have
> thots??


Sounds logical, but I have not seen it discussed like that. Also, you are assuming accum. deprec. belongs to the two purchases in some proportionate way, which may not be true. So, this is kind of calculating the *average* historical rate.