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Hello,
I search through the threads and didn't find anything similar, so I'm creating this post.
When consolidating a foreign entity, we have to translate the foreign currency into our reporting currency (i.e. USD). For example we have to translate all our UK entity’s GBP into USD before consolidating. During the process, as you convert the asset and liabilities account at spot rates (some at historical rates like goodwill) and equity at historical rates, the balance sheet is off which goes into Currency Translation Adjustment (CTA) in the OCI section
The above was the basic example. My question is, what if the subsidiary (i.e. UK entity) already has CTA in their OCI? Does this also get translated into USD? I imagine you would have to for the balance sheet to balance. However, I cannot find any guidance stating that you would translate an entities asset, liability, operation AND OCI.
Please help me find the corresponding guidance, thanks in advance.
I search through the threads and didn't find anything similar, so I'm creating this post.
When consolidating a foreign entity, we have to translate the foreign currency into our reporting currency (i.e. USD). For example we have to translate all our UK entity’s GBP into USD before consolidating. During the process, as you convert the asset and liabilities account at spot rates (some at historical rates like goodwill) and equity at historical rates, the balance sheet is off which goes into Currency Translation Adjustment (CTA) in the OCI section
The above was the basic example. My question is, what if the subsidiary (i.e. UK entity) already has CTA in their OCI? Does this also get translated into USD? I imagine you would have to for the balance sheet to balance. However, I cannot find any guidance stating that you would translate an entities asset, liability, operation AND OCI.
Please help me find the corresponding guidance, thanks in advance.