How to compare the COGS under different methods, which one is greater? Study Notes Book 2, page 264 gives us a table to remember the differences of the two methods. But This table does not indicate whether FIFO or LIFO is adopted. Anybody has good way to remember these differences?
COGS- Historic under Temporal and Avg rate under All Current. not sure though correct me if I am wrong
you are correct, cfaboston28. then depending on whether LIFO or FIFO is used, COGS can be calculated using historical for temporal or average for all-current.
I don’t get it, i have the same question with yyk6221, could someone please explain this in detail? since cosg uses his r in temporal and avg r in all-current. what’s LIFO & FIFO for? and its implication to ratios?
there are two factors: exchange rate and price per unit in LC
If i am not worng FIFO and LIFO are just analogies used to compare historical rate and average/current rate usage, respectively. With Temporal, rates are historical so its same as saying FIFO as earlier exchange rates are used first With All Current its the other way round. Latest rates are used so Last in First out. Is there anything else to these other than the above analogy? I though they refer to FIFO and LIFO just to aid our understanding.
From the perspective of exam questions, FIFO / LIFO will determine what rate (last period ending rate / average rate for the period) is used for conversion of COGS for the temporal method.