i keep forgeting which one to use so i hope this will help if someone is with me on this problem These current (moden) times Parents don’t agree (differ) with their children (subsidiary) the children want current assets and incure current liabilities while Parents still hold to old historic investments( equity, dividents) functional currency differ= use all current method assets & liabilities use current rates equity, div= historic Temporal good children are the same mind as parents, they are excise temparence- same function currency= temporal method
you go that route, you will have more trouble remembering… too much strain on all parent and children’s cells. LC=Local Currency, FC=Functional Currency, PC=Presentation Currency. -> translation required. Variation 1: LC=FC->PC ------> Temporal Variation 2: LC->FC=PC -------> Current Rate.
@CP: It may be your shorthand but I was of the understanding that if subsidiaries functional currency is different from the parent’s presentation currency we use the current method, and if its the same then we use the temporal.
basically i need a review!!! Variation 1: LC=FC->PC ------> Current Rate Variation 2: LC->FC=PC -------> Temporal. corrected version
see if this helps - with some storytelling: If I am a parent with operating subs. that are more or less independent, I dont care what they do as long as their results roll up to an EPS the street wants to see. So, I simply translate the results at the current rate so I can file my 10-Q and be done with it. If I am a parent with operating subs. that need hand holding, I need to be more diligent and ‘remeasure’ the financials. For the mechanics of it: what cp said (the second time)
“Always fun to present” Always = all current fun = functional present = presentation ‘fun to present’ functional to presentation QE-MOTHATRUCKIN-D
Am I doomed if I don’t know wtf you all are talking about?
If even CPK made a mistake, we are all doomed!
Just when you thought you finally understood it, you see a post by CP that says the opposite. That was quite a shock - for the 5 seconds until I saw the second post…
I see things really well in charts, so here’s how I “remember” it: AC T ______ P P ^ F F ^ L L Take it for what it’s worth…
functional(=)parents are tempermental…
Bump Showdown Temporal v Current - GO!
LC = FC, all curent happens mostly if the sub can stand on it’s own, operate independently in the local place. LC doesn’t = FC, temporal to get you to your FC and then all current if you need to get the FC to the reporting currency. the sub leans on the parent, can’t operate w/o them, so being needy as it is, it uses the parent’s currence as the FC and since LC doesn’t = FC, you do temporal first. the test will be very clear in terms of giving you enough info to make this call w/o any doubt.
I’m going with: “4th of July is All Current” 4th of July -> Independence day -> Independent operations, functional different from parents’ presentation currency => use all current method. Alternative, non-independent or well-integrated ops, functional is presentation => use temporal. I think I’ll remember it cause 4th of July is the next holiday after CFA (in U.S.), so I’ll think of it as being the “current” holiday.
Tic-tac-toe ------- T AC ------- P P = ^ F F ^ = L L ------------------------------ C C