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Dear tutor,
can u pls explain if the following 2 concepts are same or different things?
1- gain/loss on translation of “investment in Subsidiary”.2- gain/loss on translation of “overseas Subsidiary”.
Because as I understand, we calculated gain/ loss on translation “investment in S” to update the investment figure in P’s books (by translating it from rate as of acquisition date to that of closing rate), so that we can replace it with S’s translated net assets while consolidating.
We show this gain/loss as part of Group Retained Earnings (Eg. 3 in chap 8).However, we calculated gain/loss on translation of “overseas subsidiary” so that we can account for impact of change in exchange rate on subsidiary net asset during the reporting period i.e. between opening SOFP and closing SOFP of subisdiary. This translated gain/loss then is shown on OCI statement. (Eg 4 in chap 8).
Hence these 2 concepts appear to be distinctive to me. Am I right?
Hi,
Yes, you’re correct, they are distinct and you’ve dealt with each correctly. Well done!
Thanks
Dear Sir,
I’m following kaplan text book and also watching ur lectures.The method used by the text book for calculating exchange gain/loss on net asset and profit are different from urs.Also,the total exchange gain or loss on retranslation of opening net asset and profit are allocated between grp and NCI based on their respective shareholding and shown in NCI workings and translation reserve.But u haven’t allocated them in ur lectures so I’m confused here.Could u please guide me through??
Thanks in advance.
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