Foreign Exchange Revaluation

Foreign Exchange Revaluation

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Hello, I am translating a foreign sub into group accounts but am not 100% sure on the accounting treatment. There is a loss of $3k in Aus on revaluing the balance sheet. Where should this loss reside and what is the double entry.

I am making no provision for intercompany trading during the year. What do I need to do here?

thanks....
Aongus P Curran

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By Richard Willis
21st Apr 2006 16:28

Not totally straightforward but...
The loss on consolidation is taken to reserves as such and should be shown in the group P&L. Any inter-co trading is, on consolidation, deducted from both T/O and COGS, (i.e. Dr T/o, Cr COGS) regardless of which way it went. I have always struggled with this, but it works!

As an aside; if you have several companies with inter-co bals., I used to do a grid (in Excel, of course!) with all the cos. down the left hand side and across the top (in the same order). The rows are 'owed to' and the columns 'owed by'. The diagonal should, obviously, be blank and all the inter-co. bals filled in the relevant cells. The total Drs & Crs fall out to the right and the bottom (with suitable sum formulae) and must balance as you are adding the same figures in two directions.

Simple.

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