IAS 21 · Workpapers (Step 4 of 5)
Workpaper assignment
- Course
- Exercises
- Case studies
- Workpapers
- Exams
Foreign operation translation file: rates, translation reserve, goodwill, tax and intragroup balances
Translation of a UK subsidiary: closing rate, average rate, translation reserve and goodwill
Section 1 of 9
Objective
Section brief
- What to document
- The engagement, its scope and the working mode chosen.
- Why
- A workpaper answers one precise question: framing it avoids off-topic work.
- How
- Read the objective and the assignment, then choose the mode (guided, semi-guided, professional).
- Expected result
- You know which question the workpaper must settle, and for which reporting date.
- Your role
- Preparer of the IAS 21 workpaper
- Level
- Advanced
- Estimated time
- ≈ 75 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Groupe Solenne SA (fictitious entity), which presents its consolidated financial statements in euros, acquired on 1 January 20X5 all of Britannia Components Ltd (fictitious entity), a UK company whose functional currency is the pound sterling (GBP). For the consolidated closing of 31 December 20X5, the consolidation team must translate the subsidiary's statements, compute the translation difference, deal with goodwill and fair value adjustments, and follow the translation reserve.
Assignment
Foreign operation translation file
Purpose of the workpaper
Enter the operation's statements in its functional currency and the rates given by the case (closing, average, transaction date, historical), let the file translate the items and compute the translation difference as a balancing figure, document the judgement on the average rate, follow the roll-forward of the translation reserve, then prepare the entries and their effect on the financial statements.
Questions of the file covered by this workpaper
- Translate the assets.
- Translate the liabilities.
- Is the average rate acceptable for income and ordinary expenses? Justify.
- Translate the revenue.
- Translate the ordinary expenses.
- Translate the single expense.
- Translate the opening equity.
- Compute the translation difference as a balancing figure.
- Record the translation difference.
- Translate goodwill and the fair value adjustment at the closing rate.
- Compute the translation difference on goodwill and the adjustment.
- Record that difference.
- Check the roll-forward of the translation reserve.
Documents in the file
Open the documents to pick out the relevant information.