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Forensic Accounting

Journal entries in general ledger for foreign currency translation reserve & non controlling interests


A parent company has 2 foreign subsidiaries (who book transactions in their local currency) - one 100% owned and other 60% owned. If the company follows IFRS, at the end of the year, does the parent company post any journal entries in their books for cumulative translation adjustment and Non controlling interests (after translating subsidiary's local currency books to parent co.'s functional currency) or this is just for presentation in excel and no entries are actually posted in general ledger?

asked Mar 1 in General IFRS Discussion by Pratik

1 Answer

0 votes
The parent company shall post entries in their books for cumulative translation adjustment and NCI.
for cumulative translation adjustment it would depend upon the transactions in which foreign subsidiary being entered during the year.
Foreign currency transactions can be entered into by a reporting entity or its distinct
and separable operations. For example, a subsidiary of a reporting entity with a
functional currency of the U.S. dollar may purchase inventory denominated in euros,
or a foreign entity with a Mexican peso functional currency may sell products in U.S.
dollars; each of these is a foreign currency transaction.
Some commonly occurring foreign currency transactions include:
1. Revenue and accounts receivable arising from export sales
2. Expenses and accounts payable arising from the purchases of imported goods
3. Intercompany transactions (see FX 7 for information on intercompany foreign
currency transactions)
4. Investments in debt and equity securities denominated in a foreign currency
5. Foreign currency denominated loans from financial institutions
6. Foreign bank accounts
7. Taxes imposed by foreign tax jurisdictions

When identifying foreign currency transactions, only the functional currency of the
party that entered into the transaction should be considered; the functional currencies
of the counterparty to the transaction and the reporting entity are irrelevant.

for NCI, general rules for calculating share of NCI would apply at time of consolidation processes.
answered Mar 2 by umarhussainia Level 5 Member (10,820 points)



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