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Hi sir,
1. Why don’t we use profit for YE 2015 from CSoPL to calculate RE in w5? We are using CR to translate RE of post-acquisition (equivalent to profit of YE 2015). Hence, two figures are different. How we explain for the movement of Equity for the year?
2. GW was recorded at date of acquisition using exchange rate at that day, right? Exchange rate may fluctuate during the year. If we use CR to translate GW at reporting date, how we account for exchange rate differences on consolidated financial statements? (Suppose that GW was not impaired during the year).
3. Suppose Holly acquired Ivy on 1 Jan 2013 and reporting date was 31 Dec 2015. What rate should be applied for RE from 1 Jan 2013 to 1 Jan 2015? (I think it’s CR, isn’t it?)
ThanksHi,
I don’t think that this is from Chapter 7. But……
1. The differences are accounted for in other comprehensive income when we work out the exchange differences on translation of the foreign subsidiary.
2. The same as above in point #1. The working for the exchange gains/losses during the year looks at the gains/losses on translation of profit, net assets and goodwill.
3. Correct, everything at year end is translated at CR regardless of when the sub was acquired.
Thanks
Thanks
Hi sir,
I still wonder why don’t we use profit from CSoPL which has been translate from other currency into funtional currency using AR to calculate RE in w5. As this approach, exchange rate difference won’t incur again.
Tks
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