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Translation Methods

The document discusses four different translation methods for presenting financial statement items in foreign currency translation: single method, current/non-current method, monetary/non-monetary method, and temporal method. Each method specifies the applicable translation rate for different financial statement items and potential exceptions.

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Ziad Mohammed
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47 views3 pages

Translation Methods

The document discusses four different translation methods for presenting financial statement items in foreign currency translation: single method, current/non-current method, monetary/non-monetary method, and temporal method. Each method specifies the applicable translation rate for different financial statement items and potential exceptions.

Uploaded by

Ziad Mohammed
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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 How different Items are being presented in different translation methods:

1) Single method (Current method):

Financial statement Rate Exception


Income statement Weighted average rate Dividends (Privilege rate)
Capital (Historical – date of
Balance sheet Current rate
issuance or acquisition)

2) Current/Non-current method:

Financial statement Rate Exception


Income statement Weighted average rate Dividends (Privilege rate)
Current rate for:

 Current assets

 Current liabilities

Historical for:
Balance sheet ---
 Non-current assets

 Non-current
liabilities

 Capital (date of
issuance or
acquisition)
3) Monetary/Non-monetary method

Financial statement Rate Exception


1- Beg. Inventory (Avg.
historical at the beginning)

COGS statement 2- Purchases (Avg. rate) ---

3- End. Inventory (Avg.


Historical at the end)
1- Dividends (Privilege rate)

Income statement Avg. rate 2- Depreciation (Historical –


date of issuance or
acquisition)
Current rate for monetary
items (Cash/AR/AP/Loans)
Stock (Avg. Historical at the
Balance sheet Historical rate(date of
end)
issuance or acquisition) for
Non-monetary items
(Plant/capital)
4) Temporal method

Financial statement Rate Exception


1- Beg. Inventory
(historical rate)

COGS statement 2- Purchases (Avg. rate) ---

3- End. Inventory (Current


rate)
1- dividends (Privilege rate)

2- Dep. (Historical – date of


Income statement Avg. rate issuance or acquisition)

3- Income tax (Current


rate)

1- Plant (Historical – date


of issuance or acquisition)
Balance sheet Current rate
2- Capital (Historical –
Date of issuance or
acquisition)

IMPORTANT NOTES:

 You can use average rate to translate Dividends instead of privilege rate if not
existed

 You can use historical rate to translate depreciation, plant, and capital if issuance
rate is not existed

‫ بالنجاح والتوفيق‬Zayyoda ‫مع تحيات‬

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