Hi
We are currently witnessing below situation.
Inventory balance =$100 in local currency (EUR)
M rate (spot rate was $2)
so inventory gets remeasured to group currency (US$) to $200 USD
Month 2: We buy more inventory $200 in local currency EUR.
Inventory purchased =$200 in local currency EUR
M rate is now $1.5.
so inventory purchase for month 2 gets remeasured to $300 USD=
(i.e. rate or 1.5 multiplied by $200 EIR)
In month 2 we also sell $100 of inventory in local currency (EUR). Per FASB 52 we need to remeasure what we sold at the=
historical rate (which comes from month 1 $2). This rate is=
different than the spot rate in month 2 of $1.5.
I understand this is a generic requirement.
Thanks, Amit Patel