Foreign Subsidiary — OpenTuition Forums

HHammad6y ago

Hello. If a foreign subsidiary sells a non-current asset at a gain, how would we adjust this transaction when computing the "Translation gain/loss on net assets of foreign operations"? Thanks in advance!

stephenwidbergTutor6y ago#1

Profit on sale of asset recognised in subsidiary's accounts in local currency, and then, like the rest of the P&L, translated at average rate.

HHammad6y ago#2

So to paraphrase, we first would have to reverse the gain on sale of non-current asset (net of incremental depreciation) of subsidiary from both closing net assets (Retained earnings) and profit for the year, to be able to arrive at exchange gain/loss of net assets of foreign subsidiary?

stephenwidbergTutor6y ago#3

You are massively over-complicating it! Whether a sub sells a NCA or an inventory of sausages, deal with the sale as a foreign transaction with any XD in the P&L, then have a cup of tea, then come back and translate the subsidiary with XD going to OCI