IAS 21 CLASSIFICATION

In my study text I read about loan forming part of net investment in a subsidiary “exchange gains and losses to equity on consolidation only. Recorded in profit or loss in separate (entity only) financial statements” Could you illustrate and explain this rule I don’t understand it.

My study text also says ” goodwill is treated as a foreign denominated asset which will give rise to a further exchange difference reported in other comprehensive income” I have a problem with this, because I remember when I was doing Rose and Ribby (June 2011 and June 2008 respectively) my BPP kit took the exchange differences arising on goodwill to retained earnings (this is how it always done) but isn’t this against the standards as we need to take it to OCI?

Also, the original rule in IAS 21 regarding consolidation is as follows “the resulting exchange differences are recognized in other comprehensive income (foreign currency translation reserve) so why take the goodwill differences to retained earnings?

Now in June 2011 (Rose) we were specifically told to show the foreign currency translation reserve separately, but the BPP kit says that the examiner finds it acceptable to combine the above with retained earnings, so is that the reason they were showing the goodwill exchange differences in retained earnings? And will the examiner always find it acceptable to combine the translation reserve with retained earnings?