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Dear Tutor,
I am confused when the foreign currency translation differences are recognised in Retained earnings and when in Other components of equity.
Could you please help me with this issue?Thank you.
Hi,
Exchange differences on items in the individual accounts are recognised in profit or loss, so when converting from a foreign currency to the functional currency of the entity.
In the group accounts and exchange differences on translation of the overseas subsidiary are recognised in other comprehensive income.
Thanks
Thank you. I was confused, because there are no translation differences in other components of equity recognised in the question 1 (September/December 15; Bubble group).
There is a translation reserve, which is the cumulative translation gains/losses since acquisition. I wouldn’t spend time calculating this in the exam however.
Thanks
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