In the process of consolidating the translated financial statements of a foreign operation,the calculation of minority interests will be affected by the translation process in what way?
A)The minority interests will be allocated a portion of the gain or loss on translation from the statement of comprehensive income.
B)The effect of transactions between the subsidiary and the minority interests will be eliminated after calculating the unrealised foreign exchange gain or loss implicit in the unrealised profit on the inter-company transaction.
C)The minority interests will be allocated a portion of the foreign currency translation reserve.
D)The calculation of the minority interests' is not affected.

Question

Quizplus · Accepted Answer

The minority interests will be allocated a portion of the foreign currency translation reserve. This reserve represents the accumulated gains or losses arising from the translation of the financial statements of the foreign operation into the reporting currency of the parent company. The minority interests, which represent the non-controlling ownership in the foreign operation, are entitled to a proportionate share of this reserve. This allocation is made to reflect the economic ownership of the subsidiary's assets and liabilities, as well as the gains or losses resulting from foreign currency fluctuations. Option A is incorrect because the gain or loss on translation is allocated to the consolidated comprehensive income statement, not to minority interests specifically. Option B is incorrect because the effect of intercompany transactions is eliminated before calculating the minority interests, not after. Option D is incorrect because the calculation of minority interests is directly affected by the translation process.

In the Process of Consolidating the Translated Financial Statements of a Foreign