Consolidating balance sheet foreign currency
When the foreign operation is divested, the accumulated translation differences attributable to the divested foreign operation are reclassified from equity to profit or loss for the year as a reclassification adjustment at the date on which the profit or loss of the divestment is recognized.
For cases in which divestments made include a residual controlling influence, the proportionate share of accumulated translation differences from other comprehensive income is transferred to non-controlling interests.
Shows balances for all customers and vendors in both foreign currencies and in local currency (LCY). One is the foreign currency balance converted to LCY by using the exchange rate at the time of the transaction.
The other is the foreign currency balance converted to LCY by using the exchange rate of the work date.
Monetary non-current receivables or monetary non-current liabilities to a foreign operation for which no settlement is planned or is not likely to take place in the foreseeable future are, in practice, part of the company’s net investment in foreign operations.
A foreign exchange difference arising on the monetary non-current receivable or monetary non-current liability is recognized in other comprehensive income and accumulated in a separate component of shareholders’ equity, entitled translation reserve.
This is perfectly right, because these numbers must correspond with the consolidated balance sheet.
Also, if you need more detailed explanations with analysis of various types of transactions, then I recommend checking out my IFRS Kit where cash flows are extensively covered. 26 and 27 clearly says that you should translate cash flows using the foreign exchange rate for the period for approximation. This amount comes from the statement of profit or loss of Guten Tag translated to presentation currency.Foreign exchange differences arising on translation are recognized in profit or loss for the year.Non-monetary assets and liabilities measured in terms of historical cost in a foreign currency are translated using the exchange rate prevailing at the date of the transaction.The Parent Company’s functional currency is Swedish kronor (SEK), which is also the reporting currency of the Parent Company and the Group.Accordingly, the financial statements are presented in SEK.
Did you know that many groups prepare their consolidated cash flow statement completely incorrectly?