Академический Документы
Профессиональный Документы
Культура Документы
In this issue:
Paper E1 Paper F2
Enterprise
Operations Financial
Management
Paper T4 part B Many businesses have to deal with multiple
Test of Professional currencies, so F2 students are expected to be
Competence in able to explain currency translation principles
Management
and consolidate a group’s foreign subsidiaries –
Accounting
an area that’s always challenging in the exam
By Eric Leung
STUDY NOTES
STUDY NOTES
Translation
process (closing
rate method)
Remeasurement
process (temporal
or historical
rate method)
STUDY NOTES
Worked example
TW plc acquired 75 per cent of the equity share capital
of EQ Ltd on 1 January 2012 for $80m when the reserves of
STUDY NOTES
Summarised statements of profit or loss for the year ended 31 December 2012
TW EQ
£000 $000
Revenue 500,000 180,000
Cost of sales (380,000) (75,000)
Gross profit 120,000 105,000
Operating expenses (70,000) (90,000)
Profit before interest and tax 50,000 15,000
Finance charge (2,000) (1,000)
Profit before tax 48,000 14,000
Income tax (18,000) (4,000)
Profit for the year 30,000 10,000
STUDY NOTES
Working 1a: statement of EQ’s profit or loss for the year ended 31 December 2012
EQ Exchange rate EQ
$000 £000
Revenue 180,000 0.75 135,000
Cost of sales (75,000) 0.75 (56,250)
Gross profit 105,000 78,750
Operating expenses (90,000) 0.75 (67,500)
Profit before interest and tax 15,000 11,250
Finance charge (1,000) 0.75 (750)
Profit before tax 14,000 10,500
Income tax (4,000) 0.75 (3,000)
Profit for the year 10,000 7,500
STUDY NOTES
STUDY NOTES
STUDY NOTES
STUDY NOTES