can somebody give an example of non monetory liability? under temporal method, do we use historical exchange rate no matter it is LIFO or FIFO? Thanks.
I would say leases would be one example and also we could use historic exchange for both LIFO and FIFO based on my knowledge
“Historic” is really confusing , because it could mean many different rates. Under the temporal method , non monetary assets are translated at rates prevalent when they were created. So histric could mean different rates for different PP&E for example, and inventory could have its own ( different ) rate(s) . Inventory translation rate is mostly affected by the accounting treatment used , FIFO or LIFO. So the “historic” rate may be closer to the “current” rate if LIFO is used , while it could be much older if FIFO is used.
Deferred Revenue is a nonmonetary liability. Why would you say leases is a liability? It’s an asset. It’s just the interest liability on the lease that is a liability, and that is covered as a monetary liability I believe.
I mean for inventory, under temporal method, do we always use historical rate no matter it is LIFO or FIFO? Thanks. hw0799 Wrote: ------------------------------------------------------- > can somebody give an example of non monetory > liability? > > under temporal method, do we use historical > exchange rate no matter it is LIFO or FIFO? > Thanks.
Yes. no matter the accouting methods for inventory.
But it depends, no? if the problem mentions that inventory were purchased throughout the year, year hen why use a historic rate from the year before?
I think you need to use the rate that the inventory that was purchased instead of just lumping it as “historical”. As they may will give you a bunch of past FX rates like Beginning of the Year, Avg, FX on xx date so you’ll need to read the notes as when the inventory was purchased and use the FX on that date.
yes correct, DONT ALWAYS ASSUME ITTS HISTORIC!!
If it’s specified that inventory is accounted for “using the LIFO inventory assupmtion, was bought and sold evenly throughout the year, and that COGS is translated at average rate for the year” we still use the historic rate for inventory. I was thinking, for some reason, that the average rate would be appropriate in this instance since the inventory was “bough and sold evenly throughout the year”. janakisri is spot on with the post above. Historic doesn’t have to be synonymous to “older”.
leases aren’t liabilities or assets. it is off-balance sheet financing, only shows up in IS if it is a financial lease. if it is an operating lease then you have to consolidate it and it is both asset and liability. sort of off topic but was getting confused.