Current, temporal...suggestions for remembering rates?

CFA Level II
#1

Any mnemonics or acronyms to remember rates out there would be much appreciated, this is PITA. thanks. John

#2

Well All current method is all current rates for balance sheet (except equity), so that’s pretty easy. And it’s all average for IS, so that’s pretty easy too. Just memorize Temporal…no way around it really. Current for monetary assets and historical for non-monetary in BS, and average for monetary items and historic for non-monetary items in IS.

#3

Thanks westibbs. Add it to the list…

#4

westibbs Wrote: ------------------------------------------------------- > Well All current method is all current rates for > balance sheet (except equity), so that’s pretty > easy. And it’s all average for IS, so that’s > pretty easy too. > > Just memorize Temporal…no way around it really. > Current for monetary assets and historical for > non-monetary in BS, and average for monetary items > and historic for non-monetary items in IS. That is not correct. Temporal uses historic for COGS and Dep. COGS certainly is a monetary item. Also, remember that equity and dividends are done at the date they were transacted…not historic. In all the questions I have done they said assume that it is historic but it is an important distinction since if you do not recognize it they could throw a curve at you

#5

Good catch, thanks codont. In terms of equity would that be date of issuance?

#6

I don’t know if this will help but here’s the summary of two methods Current start with I/S - All I/S accounts at ave rate - All B/S accounts at current except common stock (at historical) - Dividends at historical rate applied when they were paid --translation gain/loss reported in SH’s Eq as part of CTA Temporal start with B/S - monetary assets & liabilities at current - non monetary assets & liabilities at historical - common stock and div at historical rate when issued/paid (same as current method) - Expenses related to non monetary assets (COGS, dep’n, amort’n) at historical - Rev & all other expenses at average rate --remeasurement gain/loss on I/S I memorized the above… I don’t think there’re any short cuts around this topic

#7

Here is how I did it. Simplified what Scarlete said by saying rate for IS is all at AVG unless you use temporal then COGS and Dep/amort are historical Rate for BS is all current unless you use temporal then non fin assets are at historical Div and equity are same in both…historical or when they were issued

#8

My method: IBBI : ACCH I/S ; B/S - Average ; Current ---- current rate method ; B/S ; I/S - Current ; Historical ----- Temporal rate method. However, Temporal: B/S is separated in 2 parts (Monetary ; Non Monetary) Re-measurement Gain / Loss is based on Monetary Asset / Liab. So the current exchange rate must be impacting all monetary asset / liabilities. So, leftovers (non- monetary) must be historical. and Revenue / Other expenses are same in either methods. Since they are measured at average exchange rate in Current Rate Method (A in ACCH), they are also measured at Average in Temporal. Leftovers (COGS, Depn, Amort etc) as usual must be at historical. Equity / Dividends are only ones which are measured at actual rate (issued/ paid), so that’s easy… Not exactly a mnemonic but helps (esp in Pure and Mixed Ratios) when you can visualize things based on B/S & I/S separation Current: http://tinypic.com/r/e15il1/7 Temporal: http://tinypic.com/r/23mswfr/7