Foreign operation translation file: rates, translation reserve, goodwill, tax and intragroup balances

Context

Groupe Solenne SA (fictitious entity), whose functional and presentation currency is the euro, holds all of Atlantic Gear Inc. (fictitious entity), a US company whose functional currency is the US dollar (USD). The parent granted it a loan in dollars and invoices it for services that feed a current account in dollars. For the closing of 31 December 20X5, the consolidation team must determine the treatment of the exchange differences on these two balances in the parent's separate statements and in the consolidated statements.

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

• Compute the exchange difference on the current account.
• Record the current account difference.
• Compute the tax effect of the difference taken to other comprehensive income.
• Record the tax effect.
• Check the roll-forward of the translation reserve.

• ContractLoan agreement and board minutesOpen
• ContractIntragroup current accountOpen
• ScheduleConsolidation dataOpen
• MemoAudit feesOpen