What is Temporal method (remeasurement)?
In short
The temporal method remeasures a foreign entity's records into its functional currency: monetary items at current exchange rates, and nonmonetary items such as inventory and equipment at historical rates.
Key takeaways
- Remeasurement gains and losses go to net income.
- It applies when the books are kept in a currency other than the functional currency, and in highly inflationary economies.
- Translation from functional to reporting currency uses the current rate method instead.
Where it's tested
BAR: Foreign Currency Translation — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Under the temporal method of remeasurement, monetary assets and liabilities are converted at: