Foreign Operation- is an entity that is a subsidiary,

associate, joint venture or branch of a reporting entity,

the activities of which are based or conducted in a
country or currency other than those of the reporting
entity.
Translation to the presentation currency
PAS 21 (1) stand-alone entity, (2) an entity with foreign
operations (parent), (3) foreign operation (sub or
branch). Determine its functional currency and
translates foreign currency items into its functional
currency when preparing its financial statements.
Translation procedures (Current/ Closing Rate
Method)
Must be not in hyperinflationary economy.
 A/L @ closing rate @ DOFS
 I/E (and OCI) @ spot exchange rates @ DOT;
average rates for a period may be used
(fluctuates significantly, don’t use)
 Exchange difference is recognized in OCI
Cumulative amount of the exchange differences is
presented in separate account of equity until disposal
of the FO.
Notes: (a) Equity @ Historical rate/ Acquisition rate
(b) Dividend @ Historical rate (c) Net Difference is the
cumulative translation adjustment.
Translation of foreign operation (Temporal Method)
For foreign subsidiaries, goodwill and fair value are
translated @ closing rate. If not wholly owned the
exchange differences are allocated to both owners and
NCI.