Does anyone have any way to remember which rates are used to change which items on the BS and IS?
wish there was, guess you gotta memorize it. All current : current rate for B/S Avg rate for Income statement Temporal: Monetary assets & Liab. use current rate fixed assets use historical rate I/S use avg rate except for cogs use historical rate
an easy way i remember it is… For All Current income statement items are based over a period of time so you use an average rate (over a period) balance sheets items are ON a particular date - so you use current (for all assets and liabilities) / historical rate (for common stock and dividends) same concept applies for temporal…except you gotta remember that in the income statement the cogs and depreciation are affected differently…everything else remains the same as all current. and in the balance sheet you either use current or historical rate ON a particular date…only exception is inventory (if its bought over the period of the year)
Just to add to mumukada’s excellent summary: common stock is recorded at historical rate in both all-current and temporal methods.
Great summary… one additional add: Translation Gain/Loss All-Current: On Balance Sheet Temp: On Income Statement
One additional add-on: The flow effect also factors in the change, as opposed to a state. So you start with the CHANGE in exposure and multiply the ending rate - AVE rate. For holding gain/loss effect, you start with begin exposure and multiply end rate - begin rate. Notice for hold period effect, it is all “states” and for flow effect you inlcude “flows”, ie. changes and averages.