This document discusses methods for foreign currency translation when a company operates in multiple countries. It describes the monetary/non-monetary method, which values liquid assets at current market rates and illiquid assets at historical rates. Examples of monetary assets include cash and receivables, while non-monetary assets include property, equipment and inventory. The document also explains the temporal method, which converts a foreign subsidiary's financial statements to the parent company's currency using various exchange rates to accurately reflect asset and liability values over time. Problems can arise from fluctuating exchange rates under the monetary/non-monetary and temporal methods.

1. MONETARY /NON MONETARY TEMPORAL METHOD
INTERNATIONAL
ACCOUNTING
PRESENTED BY:
MAHTAB FATHIMA
SECOND M.Com
G.F.G.C.W
Underthe guidance of
Sundar B. N.
Asst. Prof. & Course Co-ordinator
GFGCW, PG Studies in Commerce
Holenarasipura

2. CONTENTS
02
03
04
MEANING
EXAMPLES
DIFFERENCE
PROBLEMS
01

3. FOREIGN CURRENCY TRANSLATION
Foreign currency translation is the restatement,
in the currency in which a company presents its
financial statements, of all assets, liabilities,
revenues, expenses, gains and losses that are
denominated in foreign currencies. The process
of foreign currency translation results in
accounting FX gains and losses.

4. TYPES OF FOREIGN CURRENCYTRANSLATION
Current rate
Current/Non
Current method
Monetary/non
TEMPORAL

5. MONETARY METHOD
A method of accounting in which liquid assets are
calculated according to their current market value
while illiquid assets are calculated according to
their historical value.

6. EXAMPLES OF MOMENTARY METHOD
Profit sharing
 Pension benefits payable in cash
 Trade receivable
 Trade payable
 Deferred tax assets

7. EXAMPLES
* Merit pay.
* Profit sharing.
* Stock options.
* Vacation time (beyond an employee's
normal paid time).
* Investment in debt securities
* Cash in bank
* Bank loan.

8. NON MONETARY METHOD
A method of
accounting in which
liquid assets are
calculated according
to their current
market value while
illiquid assets are
calculated according
to their historical

9. EXAMPLES
Inventory
Land and
building
Property
Plant and
equipment
Intangible assets
Good will Copyright

10. TEMPORAL METHOD
The temporal method is a means of
converting the currency used by a foreign
subsidiary into the currency of its parent
company.
Various currency exchange rates are used in
order to most accurately reflect the true value
of the subsidiary’s assets and liabilities.
Because of fluctuating exchange rates and the
use of different exchange rates, the foreign
subsidiary’s financial statements may reflect

11. PROBLEM

12. Monetary/non -monetary method

13. TEMPORAL METHOD

14. ANY QUESTIONS

15. Conclusion
If your business entity operates in other
countries, you will be using different
currencies in your business operations.
However, when it comes to accounting,
your financial statements have to be
recorded in a single currency. This is why
you need to perform foreign currency
translation.