Separate and consolidated statements

Learning objectives

• Distinguish the treatment in the separate or individual financial statements (profit or loss) from that in the consolidated financial statements (other comprehensive income).L3, L4

Normative references

• IAS 21 §32Exchange differences on a monetary item that forms part of the net investment in a foreign operation are recognised in profit or loss in the separate financial statements of the reporting entity or the individual financial statements of the foreign operation, and in other comprehensive income in the financial statements that include the foreign operation and the reporting entity (for example, consolidated financial statements); they are reclassified to profit or loss on disposal of the net investment.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• The parent Savoy granted its foreign subsidiary a loan of {loan_usd}, valued at {carrying_amount} at inception (0.92 euro per 1 dollar). The loan is part of the net investment. At the closing date the rate is 0.95 euro. Calculate the exchange difference and its recognition in the parent's separate statements, then in the consolidated statements.L3