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Dear Sir
I am confused with the variability in the method you applied for Foreign subsidiary consolidation and the method used by ACCA while solving the P2 paper Sep/Dec 2015 in the site.
I noticed the following difference:
1. The holding gain/Loss is not added in the retained earning. (ie. Not calculated the gain or loss of the investment in the subsidiary which appears in the parent’s BS
2. In the solution The Subisidiary translation Gain /Loss is appearing “Translation reserve” under the equity. In your method, I have not seen such item
Also please confirm my understanding:-
1. If the NCI value is proportionate , the Translation Gain /Loss need not be considered while calculating the NCI end value.
2. If NCI is valued at Fair value or Full good will method, the proportionate share of gain /Loss need to be considered while arriving NCI end balnce
I am really losing my confidence in this area by these variations, So requesting you to clarify asap as I am writing this exam
Hi,
I do not calculate the translation reserve and instead include a one line item in the group retained earnings that is the gain/loss on translation of the overseas investment.
If the NCI is measured using the proportionate share method then then any gain/loss on translation of the overseas subsidiary belongs entirely to the parent.
If the NCI is measured using the fair value method then any gain/loss on translation of the overseas subsidiary is split between the parent and the NCI.
Thanks
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