Can anyone explain how the current rate method does not ignore the “unrealized” gains and losses on the non-monetary assets and liabilities. The focus is on unrealized…Many thanks in advance!
Well for starters, fixed assets are translated at the current rate. Pretty much everything is. So alot of the CTA is unrealized gains/losses because you wouldn’t realize that exchange rate exposure until it’s sold or bought.
Temporal is primarily historical rate driven so exchange rate changes don’t create as much exposure. I’m only a candidate like you so not 100% in my answer but think it’s along those lines.
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