Current Method

The “current method” refers to one of 3 approaches (current, temporal, current + temporal) to foreign currency translation. Under the current rate method:

1. Assets and liabilities are translated using the current rate. The current rate is the exchange rate of the given currency on the balance sheet date (date of financial reporting ie. 10K,10Q.)
2. Owner’s equity and dividends are translated using historical rates. The historical rate is the exchange rate of the given currency at the time the asset was acquired or the equity was issued, for example.
3. Income statement items are translated using the average exchange rate. The average exchange rate is calculated as the average between the exchange rate at the beginning of the financial reporting period and the current rate (end of the reporting period).

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