1. Profile photo of Swati says

    Hi Sir,

    I am writing DipIFR paper in June 2015.

    Need to ask a small doubt here:
    Where exactly this gain on Foreign Currency fluctuation shown? I thought it should be shown in OCI, but i checked the solutions, BPP has reduced from ‘Finance Cost’ in P/L..

    Note 10- Foreign currency loan

    On 1 April 2010 Alpha borrowed 20 million francs from a foreign bank when the exchange rate was $1 = 4 francs. The loan attracts no interest but 26.62 million francs is repayable on 31 March 2013. This represents an effective interest rate of 10% per annum. The average and closing exchange rate for the year ended 31 March 2011 was $1 = 5 francs. Alpha initially recorded the loan in its financial statements at $5 million and has made no further entries regarding this loan.

  2. Profile photo of bolero05 says

    Is the basic proforma still acceptable for foreign sub consolidation? I ask as I am trying to work out Memo, and the answer in BPP is not in the proforma style, the Subsidiary’s f/s was first translated then the figures carried to consolidation, it is all rather confusing (to me anyway)!
    Please help me if you know the answer for sure.

    • Profile photo of MikeLittle says

      Some foreign subsidiary consolidation questions require you to make adjustments to the figures before translation, and some after translation.

      Frankly, although the matter is important in real life, I wouldn’t beat myself up about it.

      Think about it! How many marks for the adjustment? And if you get it wrong, ok, you lose those / that mark. But that shouldn’t stop you from getting the other 30+ marks!

  3. avatar says

    After this, now i am trying a question in bpp, But goodwill calculations are not coming the same, Its june 2004, bpp q50 name MEMO, Bpp is using the opening rate not only in SNA@DOA, but also is Cost of investment. So the ans is getting differnt. What is the apporopriate way of dealing with it? Am i doing something wrong there? I am getting Bf as 98 and cf as 88. from the bpp ans the only diff is they appaly opening to cost of investment too. BPP ans for goodwill was 8.

    • Profile photo of MikeLittle says

      I do believe that my method of translating EVERYTHING on the statement of financial position at closing rate is an allowed alternative to the historic rate method adopted by others

      However, please be reassured that, at the very most, the temporal method adopted by others and applied to share capital and reserves at date of acquisition will be worth as a maximum just 1 mark!

      I see no reason to anticipate failure on the grounds that big providers use temporal method whereas I use closing rate method.

      You should be fine :-)

  4. Profile photo of chandhini says

    Could you tell me if the following is right?
    Receivables/Payables -> translation differences go to P&L
    Assets held under revaluation model -> differences go to OCI
    Debt instruments -> Split between OCI & P/L ( If held at FVTPL)
    Take to OCI ( If held at FVTOCI)
    And what exactly are monetary assets?
    Thanks in advance

    • Profile photo of MikeLittle says

      @sharon0709, I believe that my method is still an allowable alternative. If I am correct, I think you’ll find that translation of EVERYTHING at closing rate is so much easier. Why not check it for yourself on the internet?

  5. Profile photo of catalinviscu says

    The tutor is saying that in SOFP we should translate eberything at the closing rate but in the past exams papers printed solution they are always translates the equity section of SOFP at historic rate.Which is the correct one,please?I am a bit confused now.

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