Does anybody have any trick to remember …all those things to remeasure at Current, Mixed, Average , Historical Rates ? All current is simple and I could remember that w/o much effort… For temporal however its haaaaaard …
I don’t really have a way to memorize it, but I think the key is to keep your monetary and non-monetary stuff straight. once you do that, it pretty much makes sense. you’ve got monetary at current rates, non monetary at historical rates. Then any expenses related to non-monetary (COGS, Depr) go at historical, all other rev’s and expenses at avg, just like current rate method.
These aren’t so bad if you just step back and take a minute to think about it. This might make sense only to me but I like to think of current vs temporal as if I am a person in either my home country (all-current) or in a foreign country (temporal). So, for temporal method, anything I purchase is basically locking in the currency rate at the time I buy it (think about buying a sweater on vacation for example). This would include nonmonetary assets/liabilities, common stock (sold @ a specific price), COGS, and depreciation/amortization (which is based on the nonmonetary assets/liabs). Revenues and SG&A are kind of the same except for that they are usually ongoing, so its easier to use an average rate rather than figuring out each individual sale. Any actual foreign currency I hold (monetary assets/liabs) is going to move along with the exchange rates since those aren’t locked in. That leaves us with net income and equity, both of which have to be mixed because we are using more than one rate for the components that make up NI and equity. Thus, everything above is “locked in” at some point except for the monetary assets/liabilities, which then gives us our currency exposure. PS - I have no idea if the logic for revenues/SG&A is correct from an accounting standpoint but that’s just how I remember it.
yeah i actually solved some problems and it ain’t tht bad… Aimee, If i remember correctly, are you located in Tampa , FL ? i’m in Tampa as well…
Glad you were able to work through it… usually a few examples will straighten things out. That’s right… St. Pete/Clearwater actually, but close enough!