In section 24 there is a table that lists the type of exchange rate to use (historical, avg, current) for both the Temporal Method and All-Current Method. On the example immediately following this table, they use the “current” rate for the depreciation calculation. However, in the table it lists the “average” rate to use for depreciation and amortization calculations. Does anyone know the reasoning behind this? Thanks.
On pg 196 -depreciation on the income statement is calculated at 0.4762 which is the average rate for 2007 (as required). on pg 197 - the Accumulated depreciation on the Balance sheet is at the Current rate of 0.4545 (for Dec 2007) as required by the Nonmonetary Assets and Liabilities requirement in the same table you are referring to, in Figure 3, Pg 196. HTH…
depreciation expense is avg, and accumulated depreciation is current Thanks!
Depreciation expense is an income statement item while accumulated dep is on the balance sheet. Under the all-current method, pure ratios (numerator and denominator comes from the same statement) are equal to the non-translated ratio. This implies that balance sheet items must have the same exchange rate. Same thing for the income statement.