The same except for items that relate to non monetary eg depn COGS use rate

The same except for items that relate to non monetary

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date when fair value was determined. The same except for items that relate to non monetary e.g. dep’n COGS use rate applies to the non monetary item Income statement Foreign currency Gain/Loss AASB 121.41 Share capital at acq+ Pre-acq reserves: Date of acq. Post-acq movements insharecapital/rese rves: at the time that movement recognised Consistent with the historical cost model Against : messy to prepare if not translating from a trial balance/ does not retain financial relationships that existed in the financial statement of the foreign shusidiary/ in consis tent with the effects of exchange rate movem ents of foreign operations from the perspec tive of the parent/more volatility in earnings Current rate method (when functional currency of the subsidiary is not theAUD) AASB 121.39 Translate using the closing rate (exchange rate at the end of the reporting period) Translate at the exchange rate at the time of the transaction (average rate if multiple transactions) Other comprehensive income 121.39c Foreign currency translation reserve Relatively simple to understand/preserve balance sheet ratios of foreign sub/net assets is a more sensible defi of exposure risk of parent Against: historical cost* current rate=? Hard to interpret/no conceptual found dation/distorts relationship beween IS andBS Cash flow from operation Profit before tax increase increase Retailer’s end of year sale; reduce debt with free cash flow decrease decrease Pay for additional ad exp prior to year end decrease - Encourage employees to take annual leave prior to year end increase - Defer payments to suppliers - increase Sale of non-current assets which have a market value greater than book value
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Week 11 associate - equity accounting - significant influence Dr dividend revenue Cr investment in ... (reversal of div received from the current profits of ..avoid double counting) Dr investment in ... Cr share of profit of associate (share of associate’s post-acq current period profit) Dr share of profit of associate Cr investment in ...(fair value change/ yrs * (1- tax rate)* %) (current period dep’n adj for depreciable equipment fair value change at acquisition date as share of associat’s profit is based on contributed assets) Dr investment in ... Cr ORE ((ORE this yr –last yr)* %) (...share of associate’s post-acquisition ORE movements. If parent, equity accounting are part of consolidation journals and all prior year adj to ORE must be done each year) Dr ORE Cr investment in ... ( ORE dep’n adj for equipment fair value issue) (previous periods dep’n adj for depreciable equipment fair value change at acq date) inter entity transaction: closing inventory : Dr share of profit of associate Cr investment in... (eliminate unrealised profit so share of profit of associate reflects the interests of unrelated investors in associates AASB128.22) 公公公 (sale price – cost price ) * (1- tax rate) * rate of on hand * share opening inventory : Dr opening retained earnings Cr share of profit of associate Dr investment in ... Cr revaluation surplus (tranfer of associate’s post-acq movement in revaluation surplus) reversal of revaluation:
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