![]() Just a small note: please, do not mess up a functional currency with a presentation currency.Įvery company has just ONE functional currency, but it can present its financial statements in MANY presentation currencies. We need to follow the rules in IAS 21 The Effects of Changes in Foreign Exchange Rates for translating the financial statements to a presentation currency. General rules: translating subsidiary’s financial statements Therefore, BEFORE you start performing the consolidation procedures, you need to translate the subsidiary’s financial statements to the parent’s presentation currency. You guessed it – you can’t combine apples and pears because it makes no sense. ![]() You still need to eliminate intragroup balances and transactions, including unrealized profits on intragroup sales and any dividends paid by a subsidiary to a parent. You still need to eliminate the share capital and pre-acquisition profits of a subsidiary with parent’s investment in a subsidiary (plus recognize any goodwill and/or non-controlling interest). If you want to combine the financial statements prepared in different currencies, you will still follow the same consolidation procedures. Is the consolidation process of combining the financial statements of two (or more) companies different when they operate in different currencies? In today’s world, most groups spread their activities abroad and logically different members of the group operate in different currencies. ![]()
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |