FSA Questions ... Need Help

Hey, I have the following two questions: 1st, using all current method, when do you use historical for Retained earnings and when do you use average? … same goes to temporal? 2nd, using temporal, when do you use historical or average for inventory? Seems to me that every time it is solved in a different way and I can’t seem to fill the missing gap… Any help would be appreciated

ALl current: equity: common stock is always accounted for using Historic rate. Retained earnings= NI - Div Account NI either using Avg rate or: translate income statement all the way from Revenue and arrive at NI by plugging. Temportal: Equity: common stock always Historic rate. account for RE by plugging again, but this time use temporal set of rates: rev X avg, cogs X hist Dep X hist SG+A X avg etc, arrive at NI then less (Div paid X Hist) finally you get remeasured RE for the period. Most of the time, I do not think we should directly adjust NI or Equity by 1 paticular rate because the underlying lines of items may use different rates. Hope I am not giving any false info.

passme Wrote: ------------------------------------------------------- > ALl current: > equity: common stock is always accounted for using > Historic rate. > Retained earnings= NI - Div > Account NI either using Avg rate or: translate > income statement all the way from Revenue and > arrive at NI by plugging. > > Temportal: > Equity: common stock always Historic rate. > account for RE by plugging again, but this time > use temporal set of rates: > rev X avg, > cogs X hist > Dep X hist > SG+A X avg > etc, arrive at NI then less (Div paid X Hist) > finally you get remeasured RE for the period. > > Most of the time, I do not think we should > directly adjust NI or Equity by 1 paticular rate > because the underlying lines of items may use > different rates. > Hope I am not giving any false info. Thanks for your post. What if previous RE was given, after i computer NI and Div, do i multiply old RE by historical rate and add it to (NI - DIV ) ? How about inventory ? thanks again

If previous RE was given (in parent’s currency), then all you need to do is adjust it by the translated current year’s NI and dividends. No translation necessary. Under temporal, you’ll have to ‘plug’ RE into the balance sheet equation to figure out FCT G/L for the I/S, but under current, you don’t have to do that as FCT G/L is a separate balance sheet item that is ‘plugged’ separately.