Temporal Method of Translation - Exchange Rates Usually Provided

CFA Level II FRA
#1

I dont want any curveballs thrown at me on test day as far as balance sheet/IS items go for which they usually provde exchange rates.

On the temporal method, which rate do you use for the following. … Lets say you are evaluating at year end 2012, and they provide year end 2012 echange rats, begninning (meaning end of year, as well) and average rates, for 2012, 2011 and 2010

Balance Sheet

Inventories (2012 beginning? if they don’t provide weighted average acquision rate)

PPE (2012 beginning, if they don’t provide hitorical rate from day of acquisition

Prepaid expenses (historical?)

Income Statement

COGS (2012 beginning of year?)

Depreciation (2012 beginning ?)

Intersest expense on IS (average?)

Anything else they usuaully give us that I am missing?

Thanks for your help!

#2

They’ll make it clear which rates are current, average, and historical, and they’ll likely have only one historical rate.

Remember that if you’re using LIFO, the historical rate on the income statement is the current rate.

#3

Gotcha. so you would use the current rate for LIFO? assuming they dont give you the WA exchange rate.

#4

For LIFO COGS. And the historical rate for LIFO inventory.