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Foreign Currency Translation reserve arise at the time of consolidating the foreign entities with Holding company
Ans: While preparing the financial statemetns the parent company has to consolidate all the results,together with assets and liabilties of its subsidiaries, Associates and Joint ventures( for associate &J.V only to the extent of % of share holding) .
However if the subsidiaries, associates,or joint ventures are located in other than domestic country then while consolidation there are tend to be" Currency differences" due to difference in the rates applied
The resulatnt exchange gains or loss from translating from foreign currency to domestic country is a unrealised loss, so we have shown under separate head called" Foregin currency translation reserve".
The same is also taken while computing comprehensive income
Please let me know if any updates in this regard
Regards,
Ram
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∙ 12y ago
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How to record Foreign currency translation reserve movement in cash flow?
with excel
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