I know this topic has been addressed several times. However, I couldn’t get a clear picture from previous posts. Could anyone please tell me which exchange rate (historical, average, current) to use for COGS as well as Inventory in each of situations list below? Temporal / LIFO / Inventories were purchased at the beginning of the year Temporal / LIFO / Inventories were purchased evenly throughout the year Temporal / FIFO / Inventories were purchased at the beginning of the year Temporal / FIFO / Inventories were purchased evenly throughout the year All current / LIFO / Inventories were purchased at the beginning of the year All current / LIFO / Inventories were purchased evenly throughout the year All current / FIFO / Inventories were purchased at the beginning of the year All current / FIFO / Inventories were purchased evenly throughout the year
Temporal -> Historical All current -> Current
I’m pretty sure COGS uses average rate given Temporal / LIFO / Inventories were purchased evenly throughout the year. Someone please help with the rest and I want to know the rate for inventory too.
Under temporal, COGS and inventory are ALWAYS translated at the historical rate. What the “historical” rate is depends upon what assumptions you make and what is given in the question. If you are using LIFO and are told that the remaining inventory is from a purchase made on Jan 1 2002, then you would use the Jan 1 2002 historical rate for inventory. If you are not given any specific dates or rates for the purchase and sale of inventory (and there is no LIFO liquidation), your best assumption would be that purchases were made evenly throughout the year (use avge rate as the historical COGS rate). You should always go into a temporal remeasurement problem looking for the historical rates for non-monetary items, and then use the information present to find out what that historical rate should be. With the All-Current method, inventory is always translated at the current rate and COGS is always translated at the average rate.
Concur.
Thanks a lot McLeod. So shall I also use average rate for both COGS and Inventory under temporal, FIFO, and purchases were made evenly throughout the year?
You need to memorise the table in secret sauce: M N C E R C D N C H H M A H H M C C H C A A A A Nuff said!
what the heck?
allépourpêcher Wrote: ------------------------------------------------------- > You need to memorise the table in secret sauce: > > M N C E R C D N > C H H M A H H M > C C H C A A A A > > Nuff said! Yeah, that looks REALLY easy. My god.