For adjusting the financial statements (i.e. income statement with temporal), should we adjust for gains/losses associated with remeasurement?
It is part of comprehensive income. It does not affect N/I.
thepinkman Wrote: ------------------------------------------------------- > It is part of comprehensive income. It does not > affect N/I. Remeasurement is temporal. This affects N/I
lxada269 - I agree Remeasurement is temporal. Your translation gain/loss goes through the income statement, vs the allcurent / Translation method, where it goes through your Comprehensive Income in the Equity section
Exchange rate gains and losses (both unrealized and realized) of monetary assets are recognized on the income statement, realized gains and losses of nonmonetary assets are included in the calculation of COGS and depreciation, and unrealized gains and losses of nonmonetary assets are ignored.
Ok, let me clarify: Suppose we get a question pertaining to the reading “Analysis of FS: A synthesis” that includes the use of temporal method. Should we adjust the IS for the effects of exhange rates?
I think I know what you are getting at and the answer is no. If you are adjusting a financial statement according to Reading 30, you are making adjustments to a REPORTED financial statement, from the perspective of the analyst and in this case the consolidated statement(s) would have already included any remeasurement/translation. On the other hand, they could always throw in a question along the lines of “if such and such currency is used as the FC instead of the other currency, how would this affect your analysis”, but they would have to give you all of the information and explicitly ask you to remeasure/translate FS prior to making any adjustments. Just know that adjustments are made to reported/consolidated financial statements and you will know what to do