Translation difference on consolidation

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SaadOlath
Posts: 48
Joined: 22 Dec 2019, 10:50

Translation difference on consolidation

Post by SaadOlath »

Hi,

Should we calculate NCI on translation differences arising on foreign subsidiaries?
DJP
Trusted Expert
Posts: 114
Joined: 26 Jun 2020, 15:57

Re: Translation difference on consolidation

Post by DJP »

Hello,

Not sure if I understand your question. But what you should do when you translate a foreign subsidiary into the presentation currency is as follows:

STEP 1:
1) translate assets and liabilities (excluding goodwill) at the reporting date's rate
2) translate P&L at the period's average rate (or at the rates prevailing at each transaction's date)
3) translate all remaining B/S items at historical rates (IAS 21 doesn't tell you so, but I reckon this is what most companies do)

STEP 2:
Determine the exchange differences (excluding goodwill)

STEP 3:
Allocate the exchange differences (excluding goodwill) to the group and to the NCI

STEP 4:
Calculate and add the exchange differences due to goodwill

Hope this helps.
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