#16 in Exam 1 Morning (in volume 1 of schweser practice exams)… Can someone explain to me conceptually why if net monetary assets is positive, then under the temporal method, you will report a “loss” in the income statement? (versus a positive gain?). I need a conceptual way to remember this… Thanks!
net monetary assets position + a depreciating currency position should also have been mentioned. then it would be a loss. monetary assets -> direct relationship with the currency movement. If currency appreciates - gain, depreciates - loss. monetary liabs - indirect relationship with currency. currency appreciates - loss, currency depreciates - gain.