# COGS under temporal

I appologize if this has been discussed before. I cannot seem to 100% grasp how to do this. in some of the reading material i found that under the temporal method COGS is translated at the historical rate. but then going thru some problems and 16 week class notes i see that temporal COGS is Beg Inv @ opening rate Purchases @ (some kind of plug) End Inv @ the historical rate COGS therefore is mixed ?!?!? ANY CLARIFICATION ON THIS IS GREATLY APPRECIATED. thanks

Did the problem specify when the inventory was purchased? If not, I would do weighted average by default for COGS.

the average is only for all current tho for temporal i thought we use historic

historic unless mentioned, correct?

CFA_DC_Area Wrote: ------------------------------------------------------- > the average is only for all current tho > > for temporal i thought we use historic Historic, yea I think that’s what I meant, sorry for the confusion. But it also depends on how the question was framed. If they tell you to use temporal AND inventory was purchased evenly throughout the year, use WA.

so how would you calculate COGS if you were given that inventory was purchased evenly throughout the year? does COGS become a mixed number using 3 different exchange rates?

you use the average rate if it says bought and sold evenly throughout the year

THIS IS THE EXAMPLE THAT IS THROWING ME OFF Super, Inc., a U.S. firm has a European sub Hoops Ltd. The following data relates to Hoops: Exchange Rates Opening rate \$1.50 Closing rate \$1.80 Average rate \$1.65 Historic (blended) \$1.50 Ending inventory was purchased at a weighted exchange rate of 1.70 Temporal COGs € Exchange BI 300 @ 1.50 = 450 Purchases 1,800 @1.65 = 2,970 EI (500) @1.70 = (850) COGS 1600 2,570 this makes the COGS fx 1.6025

When it is given (clearly states) take it else historical but it doesn’t ask you to calculate via temporal. This looks like question from level I

it was in the notes for the 16 week Andrew holmes class… this is how level 2 notes 2009 are for the slides this is the only place I have seen this funky translation and getting to COGS as mixed number (all under the temporal section) so what you are suggesting is that if no additional info is given on purchases etc… using COGS as historical … if there is some info provided as to inventory was purchased evenly throughout the year… I should use WA is this correct?

there are a couple of passages in the text book when it comes to inventory … might make sense to read that…

CFA_DC_Area Wrote: ------------------------------------------------------- > THIS IS THE EXAMPLE THAT IS THROWING ME OFF > > Super, Inc., a U.S. firm has a European sub Hoops > Ltd. The following data relates to Hoops: > > Exchange Rates > Opening rate \$1.50 > Closing rate \$1.80 > Average rate \$1.65 > Historic (blended) \$1.50 > > Ending inventory was > purchased at a weighted > exchange rate of 1.70 \> \> \> Temporal COGs \> € \> Exchange > > BI 300 > @ 1.50 = 450 > Purchases 1,800 > @1.65 = 2,970 > EI (500) > @1.70 = (850) > > COGS 1600 > 2,570 > > > this makes the COGS fx 1.6025 I guess they’re assuming LIFO.