- 5 Marks
CR – Nov 2016 – L3 – Q1b – Foreign Currency Transactions and Translation (IAS 21)
Explanation of IAS 21 translation requirements for assets, liabilities, income, and expenses of a foreign subsidiary in consolidation.
Question
The directors of Bata Plc are considering the acquisition of a foreign subsidiary to facilitate foreign exchange access. However, they are uncertain about the requirements of IAS 21, ‘The Effects of Changes in Foreign Exchange Rates,’ for translating a foreign subsidiary’s financial statements.
Required: Briefly explain to the directors of Bata Plc how the assets, liabilities, income, and expenses of a foreign subsidiary, including the resulting goodwill, are translated for consolidation purposes and the treatment of exchange differences arising from the translation.
Find Related Questions by Tags, levels, etc.
- Tags: Consolidation, Currency Translation, Exchange Differences, Foreign subsidiary, IAS 21
- Level: Level 3
