Type of

Exchange Rate

Current Rate
Method

Temporal Method

Monetary and NonMonetary Method

Current and NonCurrent Method

Current
Exchange Rate

All Assets
All external
liabilities
Income statement
items
Owners equity

Monetary Assets*
Monetary external
liabilities

All monetary balance sheet

items*

All current assets and

current liabilities

Non-monetary Assets**
Owners equity
Depreciation
Cost of goods sold
Most income statement
items related to current
items

All non-monetary balance

sheet items**

All non-current assets and

non-current liabilities
Depreciation

Historical
Exchange Rate

Average
Exchange Rate

Most income statement

items related to current
items

Outcome-3
Method of Translation of currency

*Monetary items are those that represent a claim to receive or an obligation to pay a fixed amount of foreign currency unit. Example: cash, accounts
receivable, accounts payable, long-term debt and other current liabilities.
**Non-monetary items are those items that do not represent a claim to receive or an obligation to pay a fixed amount of foreign currency items. Example:
owners equity, fixed assets, long-term investment and inventory.