When any fair value adjustments exist on the carrying amounts of assets and liabilities arising on the acquisition of a foreign operation, they are treated as assets and liabilities ________________ for the purposes of translation. Therefore, they are carried in the _______________ currency of the foreign operation and are translated at the closing rate (i.e. using the current rate method)for the purposes of presentation on consolidation.

Question

Quizplus · Accepted Answer

Fair value adjustments on the carrying amounts of assets and liabilities from the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation itself. Therefore, they are carried in the functional currency of the foreign operation and translated at the closing rate using the current rate method for consolidation purposes.

When Any Fair Value Adjustments Exist on the Carrying Amounts