Consolidating financial statements example

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Intragroup receivables and payables are translated , as any other assets or liabilities.

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They remain unsold in the UK warehouse at the year-end.It is translated at the transaction date rate, i.e. At the reporting date (), the consolidated financial statements show: Please note the little trick here.If the German subsidiary does NOT sell the inventories to the parent, but keeps them at its own warehouse – what would their amount for the consolidation purposes be?The relevant exchange rates: At the date of transaction, German subsidiary recorded the payable at EUR 11 730 (10 000/0,8525).On 31 December 2016, German subsidiary translates this monetary payable by the closing rate in its own financial statements.

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