标题: rates for temporal vs. current method [打印本页] 作者: noel 时间: 2011-7-11 19:20 标题: rates for temporal vs. current method
Has anyone figured out a good acronym, short cut, etc for remembering what FX rates to use when translating to a parent company's presentation currency through the temporal and current methods? The temporal method is especially tedious.
Thanks,
John作者: needhelp1700 时间: 2011-7-11 19:20
temporal -->instant or time sensitive -->rate on the transaction happened-->non monetary on historical rate and monetary is either average rate or the rate the transaction took place.作者: hassan 时间: 2011-7-11 19:20
or just temporal---> time ---> historical rate for nonmonetary assets作者: bbtomato 时间: 2011-7-11 19:20
no tricks, but I do have this memorized, and I can scribble it out pretty quick:
Current Rate Method
Income Statement: Translate at Weighted Average
Balance Sheet: Translate everything at Current Rate EXCEPT
- Contributed Capital (do at historic cost)
- Retained Earnings (should be equal to the prior year’s ending R.E. + translated net income, the net income is translated at the current rate)
- Use CTA to balance
Temporal Method
Balance Sheet:
- Monetary Items: Current Rate
- Non monetary Items: Historic (cept securities, they are current rate)
- Issued Capital: Historic
- Retained Earnings: Adjust to balance the B.S.
Income Statement
- Non balance Sheet related: Weighted Average
- Balance Sheet related: whatever the balance sheet item was translated at
- Include a Currency Translation Gain or Loss to get the right NI
- Currency Translation Gain/Loss can go either under CoGS or SGA, IFRS and GAAP allow firm to use either
