I still can’t seem to find a straight answer for what rate to apply to inventory for these methods. I found average is used by temporal, then I found it depends on whether FIFO/LIFO used. For Current rate do we just use the most current method? This one is driving me nuts.
For All Current Method, you use the current rate regardless if it’s LIFO or FIFO. For Temporal method, you use the historical rate when the inventory was purchased. Depending on if it is LIFO or FIFO however, you will use a older or more recent rate respectively.
This is so because inventory is not a monetary asset…Does anybody have a good way to remember what consists of a monetary asset?
job71188 Wrote: ------------------------------------------------------- > For All Current Method, you use the current rate > regardless if it’s LIFO or FIFO. > > For Temporal method, you use the historical rate > when the inventory was purchased. Depending on if > it is LIFO or FIFO however, you will use a older > or more recent rate respectively. Unless inventory is purchases evenly throughout the year. In which case, you should use the average rate.
LIFO COGS -> is a current piece purchased --> Historical rate = Current Rate. End Inventory -> would be an old item left behind. --> Historical Rate = Old Rate. FIFO COGS -> is a Old piece purchased --> Historical rate = Old Rate. End Inventory -> would be an current item left behind. --> Historical Rate = Current Rate. So if you match the flow with the rate at that time, you will be fine. Only if you had a situation of uniform purchases and sales throughout the year - use the Weighted average rate.
Monetary assets are cash, account receivables, and note receivables. Not sure if marketable securities are or not. Monetary liabilities are account payables, CPLTD, and Long Term Debt. Deferred Expenses are not monetary liabilities.
Under all current method all assests are monetary assets…i remember it this way