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if a parent gives a loan to its foreign sub of $400…then apart frm eliminating the loan amt frm d receivables n payables…are we supposed to add or deduct any exchange loss on retranslating the loan in the sofp….bcoz if no such adjustment is made …then the sofp figures tallypls help…thank you
It’s an asset in the parent, a liability in the subsidiary. All subsidiary assets and liabilities are translated at closing rate. The reduction / increase in the value of the borrowing by the subsidiary is double entered against the subsidiary retained earnings
I think, from memory, that the question called Memo in revision kits has just such a situation.
Check that out and, if still not happy, post again
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