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Should the $11m loss in Goodwill due to exchange rates be credited to OCI and not Group Retained Earnings? Because in Example 4 all the loss of $28.6m has been credited to OCI?! And therefore GRE in Example 3 should be $122m?!
Gain or loss to OCI.
From the perspective of the SFP gain or loss to RE or separate FX reserve if the company has one.
From the perspective of SPLOCI, Gain or Loss to OCI, Therefore from the perspective of SPL, should Gain or Loss go to OCE?
TYPO ALERT – My previous reply had SPL instead of SFP 🙁
From the perspective of SPLOCI, Gain or Loss to OCI, Therefore from the perspective of SFP, should Gain or Loss go to OCE?
Excuse me on persisting on this issue.
As per Para. 48 of IAS 21:
“On the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation, recognised in other comprehensive income and accumulated in the separate component of equity, shall be reclassified from equity to profit or loss (as a reclassification adjustment) when the gain or loss on disposal is recognised …”
According to Para. 48, the exchange differences (with respect to the SFP) should be accumulated in OCE and not GRE. So regarding example 3, GRE should be $122m? And whatever the ‘exchange rate losses’ are, they should be recognised in OCI and accumulated in OCE.
Thanks for your patience 🙂
I understand where you are coming from. Strictly speaking a separate reserve.
I don’t get excited about it because, in the exam, you are likely to be asked for goodwill and OCI – as the groups question is now written as opposed to calculation.
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