Outcome-3

Method of Translation of currency

Type of Exchange Current Rate Method Temporal Method Monetary and Non-Monetary Current and Non-Current
Rate Method Method

Spot Exchange Rate All Assets Monetary Assets* All monetary balance sheet items* All current assets and current
All external liabilities Monetary external liabilities liabilities

Historical Exchange Owners’ equity Non-monetary Assets** All non-monetary balance sheet All non-current assets and non-
Rate Owners’ equity items** current liabilities
Depreciation Cost of goods sold, Depreciation Depreciation
Cost of goods sold
Average Exchange All income statement Most income statement Revenue, operating expenses Most income statement items
Rate items items related to current related to current items
items

*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:
owner’s equity, fixed assets, long-term investment and inventory.