If we want to know the impact of changing fx on subsidiary exposure via temporal method, we need to know subsidiary is net monetary asset or liabilities. (need to know monetary asset - monetary liabilities >0 or not)
In terms of liability, I’m wondering if everything under balance sheet liabilities will be treated as monetary liabilities? Thanks.
Unearned revenue is non monetary.
Monetary liabilities are interest bearing liabilities. Short term & long term loans…
Yup just focus on short term/long term loans
Got it. Thanks everyone.
But how about A/P, deferred income tax?
Think of monetary liability as anything which has a defined dollar value. For example, short term/long term loans- you know how much you need to pay back to the lender.
Rest everything is non-monetary.
Got it. Many thanks!