Foreign Subsidiary

This topic has 3 replies, 2 voices, and was last updated 6 years ago by Stephen Widberg.

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November 8, 2019 at 5:31 pm #551849
hammad1996
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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!
November 8, 2019 at 6:12 pm #551852
Stephen Widberg
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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.
November 10, 2019 at 4:38 pm #551968
hammad1996
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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?
November 11, 2019 at 5:02 pm #552225
Stephen Widberg
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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
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