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
Disposal of a foreign operation: loss of control, partial disposal, non-controlling interests and differences accumulated before hyperinflation
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
- Expert
- Estimated time
- ≈ 75 min
- Progress
- 0 / 5 steps done (review excluded)
Context
Groupe Solenne SA (fictitious entity) presents consolidated financial statements in euros and accumulates the translation differences of its foreign subsidiaries in a translation reserve. In 20X6 it sells 60 % of the share capital of Vistula Systems Sp. z o.o. (fictitious entity), 80 % held, and loses control while retaining 20 %. It also sells 30 % of the share capital of Caledonia Packaging Ltd (fictitious entity), 100 % held, without losing control. Finally, the functional currency of Zandia Retail SA (fictitious entity) became that of a hyperinflationary economy during the year. The consolidation team must deal with the translation reserve of each subsidiary.
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 share of the cumulative difference of Vistula belonging to non-controlling interests.
- Record the allocation of that share.
- Compute the amount reclassified to profit or loss on loss of control.
- Compute the share of the cumulative difference of Caledonia to reattribute.
- Check the roll-forward of the translation reserve.
Documents in the file
Open the documents to pick out the relevant information.