FIFO

So I’ve noticed 2 different treatments for FIFO and the temporal method in Schweser. Should you simply remeasure COGS at the historical rate? Or should you assume that inventory was sold evenly throughout the year, effectively making the historical rate = to the average rate? Opinions?

depends…if the question says something that the company has been continuously buying and selling throughout the year - use average rate even for temporal. Otherwise, use historical rate.

They way I see it is that COGS are always measured at the historical rate under the temporal method. The historical rate is just the rate at which the COGS were purchased. So, sometimes the historical rate is the same as the average rate.

wanderingcfa Wrote: ------------------------------------------------------- > They way I see it is that COGS are always measured > at the historical rate under the temporal method. > The historical rate is just the rate at which the > COGS were purchased. > > So, sometimes the historical rate is the same as > the average rate. Could say the difference is sometimes it’s historical and sometimes it’s “historical”