I use Schweser to study and on page 132 of book 2 it says, “Nonmonetary assets include inventory … are remeasured at the historical rate” but then for the example on page 140 it used 0.4762 for the rate to remeasure inventory, and 0.4762 is the “average rate” in that example. Did they make a mistake or is there a reason for this? Which is correct?? Thanks all!
In the first phrase I would also add “…at the historical rate the inventory held on balance sheet was acquired” which is dependent on the cost flow assumption of the company (LIFO, FIFO, weighted average cost). I do not use Schweser so I cannot look into the specific example but probably the company in this example either uses the weighted average cost method or the ending inventory comes from purchases which were made evenly during the year and thus average exchange rate should be used.
oh! problem solved! It was my mistake they did have a line saying use average rate to value inventory. Thanks
Make sure you are careful on the exam. I’ve been tripped up before on a question just like that. If they specifically tell you what rate to use just ignore the normal rules.