Hello,
I hope you're doing great.
I have a question regarding accounting under IFRS, and I don't have that much of experience with it. The case is like this:
Company Y is a parent and all of its subsidiaries are fully consolidated. One of its subsidiaries (Entity B) holds 100% of shares of two of the subsidiaries (Entities C and D), and the shares appear as a non-financial asset (shares in affiliated companies) in Entity B financial statements, and are accounted for at cost. However, the issue is that Entity B has a different functional currency that entities C and D. Every month they make an adjustment for the shares in affiliated companies item to reflect the change in the currency on a monthly basis. Is this permitted under IFRS? Would really appreciate it if you can refer me to the standard and the paragraph!
Thanks a lot
Shares in Affiliated Companies in Foreign Currency
Re: Shares in Affiliated Companies in Foreign Currency
is the functional currency of C and D relevant? are you saying the purchase of shares in C and D, by B, was denominated in a currency other than B's reporting currency?
Re: Shares in Affiliated Companies in Foreign Currency
Hey! Thank you for your reply. Yes, the purchase was in was denominated in a currency other than B's reporting currency. Also, to be honest I'm not sure if the purchase in the first place should be measured at fair value or cost.
Re: Shares in Affiliated Companies in Foreign Currency
Thank you for your reply, do you know if it should be measured at fair value or cost? because I'm not sure about this part also.Leo wrote: ↑01 Jun 2022, 18:04 Hi,
It's no monetary, so, only at historical costs :
https://www.cpdbox.com/monetary-non-monetary/
Re: Shares in Affiliated Companies in Foreign Currency
cost , fair value , or equity accounting.
Re: Shares in Affiliated Companies in Foreign Currency
As JRSB wrote, it's a policy choice:
https://ifrscommunity.com/knowledge-bas ... tatements/
it these shares are held at cost, then they shouldn't be retranslated after initial recognition as they are non-monetary items
https://ifrscommunity.com/knowledge-bas ... tary-items
https://ifrscommunity.com/knowledge-bas ... tatements/
it these shares are held at cost, then they shouldn't be retranslated after initial recognition as they are non-monetary items
https://ifrscommunity.com/knowledge-bas ... tary-items