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Current or Temporal?

I thought when the functional and parent currency were different you use the ALL CURRENT method under US GAAP.


when the local/functional/parent are all different , you are supposed to use temporal to translate the local into the functional, and then use ALL CURRENT to measure functional to parent.

can someone please see if this is right. Is it the same under IFRS?

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You are correct.

If local and functional are different use temporal to get local into functional. Then use current to get from functional to presentation.

the only diff between GAAP and IFRS with multinationals has to do with hyperinflationary enviornments:

GAAP: use temporal
IFRS: adjust by the inflation index and use all current method

I think this is right and the same under IFRS. Just remember that since func/parent is diff, you definitely need to use all current. Then temporal is used to translate local into functional.

Things I like to do with temporal vs. all-current problems:

Draw a small box representing the subsidiary. Fill it with the local currency’s currency symbol.

Draw a larger box (representing parent Co) containing the small box, and then fill it with the reporting currency’s currency symbol.

Determine the functional currency and then write down “ALL-CURRENT” or “TEMPORAL” to remind me what the heck I’m using.

Draw flags of the countries represented on your box diagram as well. If the problem uses a made up currency (The “Bundian Dollar”) and time allows, come up with a flag for the nation. Eagles clutching things in their talons are almost always a good starting point.

I do not understand the logic of translating first using temporal from local to functional and then use all current from functional to prensentation. I thought if the currencies are different use all current. But looks like not in the case of local to functional. Is there a logic behind this?

Trying to understand this a bit more. Can anyone point me to the Schweser or CFAI page number?