how is accumulated depn translated? current

mamuka12

under temporal?
current?

profil

Temporal: historical rate (ie when equipment that created the AD was purchased).

Current: Current rate.

giorgio10

ya i had thought current rate too, but i thought i read the the I/S was all avg rate in current method.

that is i thought Net income was avg rate even with depreciation



Edited 1 time(s). Last edit at Sunday, May 29, 2011 at 10:12PM by PC79.

iteracom

You asked about accumulated depreciation though. That's current rate. The FCT adjustment fills in the difference.

ryanlb

Current: average rate

firat

Ok now im confused more...

Depreciation is Avg Rate and
Accum Depreciation is current rate???

madaochenggong

Yep. That won't balance when translated under changing exchange rates, and that's what the FCT adjustment in S/E is for.

scarecrow

just remember that for current rate everything in I/S is translated at Ave. raege except dividents(historical) I/S only contains current depreciation

for B/S everythung under current rate is translated using current rate except equity and B/S contains all accumulated depreciation todate

under temporal everything in I/S is average except COGS, dep, dividends) historical
Everything is historical in B/S except cash assets and liabilities (current)

cv4cfa

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??

mp3bu

true enough .. only 2 items at hist in all current method : dividends and Common stock.