does translation gain or loss have anything to do with currency appreciation/deppreciation? for example, if under current method, a gain happen and the local currency is depreciation, is it a translation loss? if under temporal method, a loss happen and local currency is deppreciating, is it a translation gain? Thanks.
That is what the whole chapter is based upon.
wow! i never saw it like that???
It depends on your exposure: 1. Under the current method, your exposure is your equity (A-L) which is usually positive. 2. Under the temporal method, your exposure is your monetary assets minus your monetary liabilities. A net asset exposure in both situations combined with an appreciating currency leads to a gain.
are you taking the cfa exam hw0799?
Does mean-varaiance analysis have anything to do with the Portfolio Management section?
does depreciation have anything to do with buying an asset?
Wow, 30 seconds of my life I will never have back…I know, I know, that’s what she said.
- temporal ( currency risk exposure is only for monetary assets and liabilities) if you have a net monetary asset position in the foregn currency a depreciating foregn currency will result in a loss for net monetary liability you want the foreign currency to depreciate because you will post a gain in translation. results in translation gain or loss in the income statement 2. current rate ( all assets and liabilities are exposed ) A- L= Equity usually positive so it should usually be a gain when currency appreciates and a loss when it depreciates results in cumulative translation adjustment in OCI
agree with audrey mwala
lol funny thread