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Hi there,
I have a question regarding W4 – NCI in regards to questions with foreign currency. I thought that all assets and liabilities were translated at closing rate, however in one of the Kaplan revision questions, for working 4 the NCI% of post acquisition net assets were translated using the average rate for the year.
Can anyone please explain this?
Hi,
NCI is neither an asset nor a liability, so is not translated at the closing rate. To calculate the NCI we take the NCI at acquisition and add the post acquisition profits. The profits come from profit or loss, and are therefore translated at the average rate.
As they are translated at the average rate, and the assets/liabilities all translated at the closing rate then this will give rise to exchange rate differences that go through OCI.
Thanks
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