Sign up  |  Log in

Cumulative Translation

Once you translate your BS and IS using the temporal method, how do you know whether you have a net asset exposure or a net liability exposure? 

"Using Wiley for my CFA journey was by far the best option… I was able to pass on my first attempt.”– Moe E., Canada

You do the math on the local currency, not on the translated.

If your monetary asset is 500 and your monetary liability is 1000, then you have a net liability exposure of 500. 

You know even before translation.. If your monetary assets exceed monetary liabilities you have a net monetary asset exposure. However if this is not the case you have a net monetary liability exposure

Connecting...