- This topic has 7 replies, 2 voices, and was last updated 11 years ago by
.
- Posts
Hello, how do we account for intra group sale between group with foreign subsidiary.
It says goods are recorded at CR 12m and paid CR 13.2m resulting a exchange loss of CR 1.2m.
So during translating NA of Foreign Sub, we debit CR 1.2m to post acq RE, what about the credit entry?
Without having access to June 2004 exams, I am answering this from memory! Having arrived at the 1.2 is the double entry not against “Payables”? Surely the printed answer must show where the credit entry has gone!
Why is it against payables? Yes in the suggested solution credit payable. But i cant see the relationship as there is no explaination.
Is the foreign amount that gives rise to this difference not as a result of a purchase that is not yet paid for? I seem to remember that the 1.2 difference arose from translating the intra-group payable balance at closing rate
Ya right. I got it.
In the question there is this one line “Any exchange gain or loss arising on the transaction is still held in the current liability”
What does it mean? Do i need to make any adjustment? This line relates bout the intra group sale.
Yes, you need to remove it from liabilities and put it into Statement of Profit or Loss and Other Comprehensive Income
You said transfer from liability to RE, hence, reducing payable/liability.
But in the suggested answer. Dr .RE, Cr. Payables/Liability
It means that payable/liability is increasing.
- You must be logged in to reply to this topic.