CFA Level II Multinational Operations (FRA) Schweser 15.5 Example

CFA Level II FRA
#1

Hello,

I’m looking at the examples from Schweser 15.5 examples that show both the temporal and current rate method translations of Vibrant’s financial statements under the parent (FlexCo). I don’t understand why, in the Temporal method, they use the more recent rate for Inventory translation. This implies that the inventory uses FIFO method of accounting, but this is not specified anywhere in the question.

Please help!

#2

What do you mean by more recent rate? Do you mean current rate?

Under temporal method, current rate’s applied to monetary assets vs. historical rate’s applied to non-monetary assets. So I believe inventories under temporal method should be translated with the historical rate.