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Multi currency consolidated group accounts

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Hi folks,

Would any of you be able to point me in the direction of some good resources or training materials based around producing consolidated group accounts where the subsidiary and parent company have different base currencies?

Scenario is that USINC is a 100% subsidiary of UKLTD with the USINC accounts produced in USD and the UKLTD accounts in GBP. Three main areas that I am interested in: 

1) Eliminating intra-group transactions (in this case, it is just sale of goods from UKLTD to USINC)

2) Currency conversions from USD to GBP- what exchange rates to use and when

3) Unrealised profits

 Just something I am having a bit of a look into before we take any leap into trading in the US, would be good to have a solid understanding of how the reporting works at an early stage.

Thanks!

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By exceljockey
08th Sep 2020 21:27

LinkedIn Learning is your best bet I think.

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By johnt27
09th Sep 2020 10:22

Best place to start on this is with the accounting standards, after that both ACCA and ICAEW have learning resources on consolidation, although some of this is restricted to members.

In terms of the mechanics multi-currency consol only differs slightly from normal consolidation. The usual approach is to use an average rate of exchange on the P&L and most, if not all, balance sheet items will be translated at year end spot rate. Intra-group eliminations can be done at spot rate or an average.

You will end up with an FX reserve in the consol accounts as taking an average of P&L rates and spot for balance sheet rates will create a natural difference. These FX variances will also need to be shown in fixed asset tables etc

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Replying to johnt27:
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By eclipse15000
09th Sep 2020 10:37

Very helpful, thanks

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