Consolidating balance sheet example
If the equity balances result from income and expenses presented in OCI (e.g.
revaluation surplus), then it’s more appropriate to translate them at the rate at the transaction date.
If not, then apply the average rates for the period. Here, IAS 21 is silent again, but in my opinion, the most appropriate seems to apply the rate ruling at the transaction date. So, let’s say the German subsidiary sold the goods to the UK parent on 30 November 2016 for EUR 5 000.
They remain unsold in the UK warehouse at the year-end.
The reason is that it’s easier and logical to fix the rate at the date of the acquisition when the goodwill and/or non-controlling interest are calculated.Be careful – this is the translation of a foreign currency payable to a functional currency, hence nothing to do with the consolidation.