RSM321H1 Chapter Notes - Chapter 11: Write-Off, Deferred Income, Equity Method
Document Summary
Ias 27 requires the consistent application of accounting policies for like transactions. Thus, a subsidiary"s fs must be adjusted before consolidation to reflect the accounting policies that the parent uses. Foreign-currency-denominated fs must be translated to the presentation currency of the reporting entity. Foreign currency exposure (fce): the risk that a loss could occur if foreign exchange rates changes. Three different perspectives to fce: translation (accounting) exposure. Results from the translation of foreign-currency-denominated fs to. Only those fs items that are translated using the closing/forward rate create accounting exposure. The cad value of these items vary with changes in the exchange rate (those translated with the historical rate have a fixed cad value). Items translated at the closing rate will have translation adjustments to reflect the exchange rate fluctuations. Positive translation adjustments on assets can offset negative translation adjustments on liabilities. If exposed assets = exposed liabilities, the translation adjustments net to 0.
