Quick way to calculate CTA (loss/gain) in Temporal method

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maxmeomeo

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Hi everybody,
It took my around 10mins yesterday just to solve for CTA in TEMPORAL method because I had to make sure I didnt mess up with rates. ( pretty slow I guess).
Just wonder if any of you “invent” or “explore” a shortcut to find this number? Otherwise we have to build the B/S to find ending R.E, and plug in Net income, then plug in CTA, the process which is likely to incur so many errors.
Thanks
 
no short cuts as far as I know. by the way temporal does not have CTA, current rate does temporal has remeasurment gain. good to know in case they try and mess you up with that
 
Thank you. I mean the translation gain/ loss that is recognized in the income statement . I was mistakenly using the wrong name.
A friend of mine told me last year he found a way , however he forgets it now :(
 
If we get a question to calculate this im going to get my pencil and shove it through my eye. unless they give you half these variables (NI) and etc they cant possibly get you to do this.
Sometimes when you study for this you gotta ask yourself, can they actually ask this or am i just wasting my time on this.
 
For the CTA (current method), you can total the assets and you’ll have to calculate the retained earnings (beginning RE + NI - Divs) = ending RE and then plug the CTA. They will have to give you beginning RE somewhere in the problem.
 
I think there are no shortcut here, everything just an equation.
 
Hi all - could I just confirm that this is correct:
If we are using the current method then we do have a shortcut.
The shortcut is to take the net current assets position and apply the fx momentment.
E.g. If we have a positive net current assets position on the subs balance sheet, and the presentational strengthens relative to the sub, then the parent will recognise a CTA gian. The gain will equal FX movement multiplied by the net current asset position.
Please confirm that this logic is correct.
Kind regards
 
Hi all - could I just confirm that this is correct:
If we are using the current method then we do have a shortcut.
The shortcut is to take the net current assets position and apply the fx momentment.
E.g. If we have a positive net current assets position on the subs balance sheet, and the presentational strengthens relative to the sub, then the parent will recognise a CTA gian. The gain will equal FX movement multiplied by the net current asset position.
Please confirm that this logic is correct.
Kind regards
 
CTA = (Total Assets - Total Current Liabilities) * current fx rate - capital stock - REending
REending = REbegining + NI - Dividends
Ok that was for Current. I guess there can be no shortcut for Temporal.
 
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