What rate to translate reserves upon consolidation

What rate to translate reserves upon consolidation

Didn't find your answer?

When revaluing Euro balances at month end upon consolidation into GBP, I have been using the closing rate for balance sheet items and the average rate (annual rate) for the P&L. What rate whould I use for valuing the reserves bought forward from the previous financial year, bearing in mind these reserves would have been valued at the average rate when they were classed as P&L last year

Replies (13)

Please login or register to join the discussion.

By johngroganjga
09th Mar 2015 13:12

The £Stg for the b/fwd

The £Stg for the b/fwd reserves will be last year's figure.  Everything else, i.e:

the difference between closing rate and opening rate on the b/fwd reserves, and the difference between average rate and closing rate on the result for the year

​.... is exchange difference movements on reserves.

Thanks (0)
avatar
By JanetHewitt
09th Mar 2015 15:14

Clarification please

Thanks John. Can I please clarify

The subsidiary in question has only traded for one year ending 31/12/14. Therefore there are no reserves b/fwd at 01/01/15 other than the profit for the year 2014. As these profits would have been translated using the average rate at the year end, will the reserves in 2015 stay valued with the same rate?

Thanks (0)
By johngroganjga
09th Mar 2015 15:22

Well your question was how to translate the "reserves brought forward from the previous financial year" and that was the question I answered.

As at what date are you doing the consolidation here? 31/12/14?

Thanks (0)
Replying to spilly:
avatar
By JanetHewitt
09th Mar 2015 15:25

I'm not doing a consolidation as at 31/01/15.

Thanks (0)
avatar
By JanetHewitt
09th Mar 2015 15:26

Sorry, that should have said, I'm now doing a consoldiation as at 31/01/15

Thanks (0)
By johngroganjga
09th Mar 2015 15:32

And your opening balance sheet for the purposes of that consolidation is at .... ?

Thanks (0)
avatar
By JanetHewitt
09th Mar 2015 15:39

The opening balance sheet is shown at closing rate of 31/12/2014, other than the revalution reserve, which is made up of the difference between the balance sheet items and the P&L (reserves) calculated at average rate (as at 31/12/2014)

Thanks (0)
By johngroganjga
09th Mar 2015 15:46

What you describe as the "revaluation reserve" sounds like the 2014 exchange difference taken to reserves, not the unrealised surplus on a property revaluation.  Is that right? 

Thanks (0)
avatar
By JanetHewitt
09th Mar 2015 15:50

Yes there is no property to consider. The revaluation reserve in 2014 is created  purely because of the foreign subsisdiary consolidating into a group company.

Thanks (0)
By johngroganjga
09th Mar 2015 15:57

So my first answer deals with this doesn't it?

What is perhaps confusing you is that your opening reserves are in fact the sum of the P & L balance and what you are referring to as the revaluation reserve. Add those two figures together and all will become clear.

Thanks (0)
avatar
By JanetHewitt
09th Mar 2015 16:08

Okay, so we are saying that in fact at 01/01/2015 there is no revaluation reserve and  the reserves are valued at the P&L 2014 valuation + the revaluation reserve

Thanks (0)
By johngroganjga
09th Mar 2015 16:16

Yes of course. And it would help if you stopped calling the exchange difference posted to reserves "the revaluation reserve"!

Thanks (0)
RegASinclair
By RegASinclair
27th Apr 2018 12:23

Translation reserve arises at Consolidation when a particular subsidiary maintains it books of accounts other than INR. (India Specific).

Thanks (0)