In group consolidation, group exchange rates are adopted to convert foreign subsidiares assets, liabilities and P&L. Problem arise when subsidiaries which need to follow a goverenment deternmined exchange rate (E.g. Thailand needs to follow the Bank of Thailand exchange rate). Exchange difference arise in elimination of intra-group receivable and payable. Can anyone advise what is the generally accepted international accounting treatment for the above? Say for example, a parent company and a subsidiary has HKD and THB respectively as its functional currency. And the group presentation currency is also in HKD. There is USD1m intercompany payable from the subsidiary. The parent company booked the receivable using the group USD to THB rate of 30.00 whereas the subsidiary booked the payable using Bank of Thailand rate of 34.00. So, how are we going to deal with such exchange difference?
2007-08-27
18:46:08
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2 answers
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asked by
Stevie
2