Module 30 - Consolidation: Foreign Subsidiaries

Question 1

Dividends

Answer 1

Assume paid at average rate

Question 2

Carrying amount of goodwill

Answer 2

Calculate using the functional (local) currency on the date of acquisition

Question 3

Elements of the goodwill calculation

Answer 3

At exchange rate at acquisition date

Question 4

Impairment losses

Answer 4

Average rate for the year

Question 5

Carrying amount of goodwill at the reporting date

Answer 5

Closing rate

Question 6

NCI must be allocated

Answer 6

OCI of the subsidiary including exchange difference on translation (translation reserve)

Question 7

Exchange difference on translation double entry

Answer 7

DR/ CR Share capital
DR/ CR Retained earnings
CR/ DR Translation reserve

Question 8

Exchange difference on goodwill double entry

Answer 8

DR/ CR Goodwill

CR/ DR Translation reserve

Question 9

NCI allocation of shares of exchange difference double entry

Answer 9

DR SPL - NCI (% of CY profits)
DR/ CR Translation reserve (% of exchange difference on translation
CR SFP - NCI (total)

Question 10

NCI not allocated any of exchange difference on

Answer 10

Goodwill

Question 11

Consolidation steps impacted by foreign exchange

Answer 11

2 and 5

Question 12

Inventory

Answer 12

Don’t retranslate - it’s not a monetary item

Question 13

At subsequent reporting date - monetary items

Answer 13

Retranslated using the closing rate

Question 14

At subsequent reporting date - non monetary items held at historic cost

Answer 14

Held at historic cost

Question 15

At subsequent reporting date - non monetary items held at fair value

Answer 15

Retranslated on date of valuation

Question 16

At subsequent reporting date - exchange differences are recognised in

Answer 16

The SPL

Question 17

Items in the SFP

Answer 17

Translate at closing rate

Question 18

Items in the SPL

Answer 18

Translate at the average rate