I have a company which was acquired last year and changed its functional currency to USD on the date of acquisition at the spot rate on that date, and all non-monetary assets and liabilities have remained at this cost in the books.
This year, we are undertaking a capital reduction. The company is reducing its ordinary share capital and share premium account to distributable reserves as part of a broader plan to change the group structure.
My question is this, the share capital is in GBP (£1 shares) on Companies House and by default so is the share premium account. It is my understanding that we carry out this transaction at the USD values we are carrying the share cap and premium in our accounts i.e the GBP:USD rate at the spot when we were acquired?
However, a colleague suggests that we need to translate the share cap and premium at the spot on rate on the date the transaction is executed?
Any assistance on this would be greatly appreciated. Having looked online and in some texts, I cannot find any guidance confirming either approach.