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Sir can you help me understand this, it is regarding the last illustration in bpp study text Foreign operation chapter.
I want to understand that we cancel out intra group loans and receivables and payables but do recognize their corresponding Foreign exchange gain/losses? As the gain/loss is only there in parents statements hence there is no opposite movement in subsidiary to cancel this?
I understand your pain but…
If P (reporting in $) lends euro to Sub (reporting in euro) – only 1 company has XD – that company is P on its foreign transaction.
Point of hedge is that in the group accounts XD on loan will be in OCI not P&L. P shows XD in it’s P&L in its own accounts but it moves to OCI in group accounts.
Prize winner stuff indeed
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