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Solution for example 2 and
The (working5) wherein calculation of 80%*130 = 104 Dinars but this is not convereted in $ but directly added in retained earnings as 104 Dinars but it should be 104/4.3 = $24.18.
Secondly why investment difference is calculated and where is the translation gain loss shown in workings.
Please advice. Thanks for all the help.
Hi,
Thanks for pointing this out, I’ll try and get it updated.
The investment difference is calculated as all of the assets/liabilities of the subsidiary have been translated at the closing rate but the investment in the parent’s books will not have been translated. As the investment is eliminated on consolidation we need to remove it using the same rate as the assets/liabilities have been recorded at.
Thanks
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