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Dear experts,
I would like to inquire regarding the existing inventory revaluation that our company is currently doing. We are a manufacturing company, our Raw Materials purchases are Pesos and Dollars. Every 6 months, they revalue the amount of the inventory in dollar using the average rate. For January, they use average rate for december and for July they use average rate for june....At the end of the calendar year, instead of revaluing their inventory on January 1st, they will revalue the inventory on dec 31 using the average rate for December.
Is the above practice correct? Can I relate the above practice to the F/S translation rule? In the F/S translation rule, Inventories are translated at historical rate.
Kindly help me resolved my problem.
Thanks,
Luz
I would like to inquire regarding the existing inventory revaluation that our company is currently doing. We are a manufacturing company, our Raw Materials purchases are Pesos and Dollars. Every 6 months, they revalue the amount of the inventory in dollar using the average rate. For January, they use average rate for december and for July they use average rate for june....At the end of the calendar year, instead of revaluing their inventory on January 1st, they will revalue the inventory on dec 31 using the average rate for December.
Is the above practice correct? Can I relate the above practice to the F/S translation rule? In the F/S translation rule, Inventories are translated at historical rate.
Kindly help me resolved my problem.
Thanks,
Luz