I keep messing this up. Tell me if this is correct for the temporal method: FIFO: COGS - Average rate INV - Average rate LIFO: COGS - historical INV - historical
For temporal its all historical no matter which accounting method they use. Depending on how the question phrases the way the firm purchased inventory will dictate whether you use some average rate or the historical rate when the inventory was purchased.
so it doesnt matter which LIFO/FIFO we choose when we do remeasurement? a little confused…
as Nib said…it’ll depend when you bought the inventory - whether it’s LIFO or FIFO, for temporal. for all current it’s ALWAYS average… example if you bought the inventory at the beginning of the period, and you use FIFO, for calculating COGS and Inventory - under temporal you will use the beg of period exchange rate if you bought it throughout the period, it’s irrelevant whether you use LIFO or FIFO, the cogs will be determined using the period’s average rate… hope that helps.
it does but the question will have to give you info about when you purchased , what your beg inv was…etc… but in general if you just have a b/s and i/s you just use historical… if you need to break the Beginning inv + purchases - ending inv = cogs… they will have to give you some dates as to when you made the purchases… unless they tyell you it was purchased evenly throughout the yr… then purhases = av rate for the year
Temporal = Historical price for all non-monetary assets (i.e. the price that you paid for those assets) LIFO: The COGS is the “new” inventory since it was the last one purchased while the inventory on the BS is the “old” inventory. Hence , use average rate for COGS and historical for Inventory: COGS: Average Inventory:Historical FIFO: COGS is the “old” inventory since it was purchased earlier and is the first one to go out.Use historical for COGS and since the inventory on the BS are the items that you purchased recently, use Average COGS:Historical Inventory:Average Hope this helps.
Corrections: Temporal = Historical price for all non-monetary assets (i.e. use the exchange rate in effect when you bought those assets)
sure everything here’s going with historical rate, but it is safe to say Purchase=>average rate while Inventory BGN=>historical rate like in LIFO, if # of Purchase (number of products purchased) ># of COGS COGS=>avg Inv END=>mixed rate if "mixed rate Inv END=>historical rate and FIFO also depends on # of Purchase vs. # of COGS
Temporal: Inventory @ Historic (…it will matter LIFO/FIFO) COGS @ Historic (…it will matter LIFO/FIFO) …chances are they are going to say the inventory was purchased evenly throughout the year so you won’t have to deal with a different exchange rate for every purchase (it simplifies things and lets you use the average rate) All-Current: Inventory @ Current COGS @ Average