商学院财务报表合并讲义 英文参考.ppt

* * Lower of Cost and Net Realizable Value Lower of cost and net realizable value (NRV) – if the foreign currency weakens, NRV of a balance such as inventory might be lower than the item’s cost when translated into Canadian dollars, even though it might still be higher than cost in the foreign currency. In such cases, if the foreign currency strengthens at a later date and NRV translated into Canadian dollars exceeds cost the write-down can be reversed. Note that this is only of concern for integrated operations. Not applicable to self-sustaining operations. Why? Because all assets are translated at the closing rate regardless of whether they are carried at cost or net realizable value. See next page for examples. * Lower of Cost and Net Realizable Value - Example * Other Considerations Intercompany profits – Upstream and downstream intercompany profits with integrated subsidiaries are eliminated at historical cost which is the same as their carrying values in the parent or subsidiary accounting records. Although assets of self-sustaining subsidiaries are translated at the closing rate, unrealized intercompany profits with self-sustaining subsidiaries are still eliminated at historical cost * Other Considerations Tax effects – Foreign subsidiary financial statement exchange translation gains and losses are usually not taxable or deductible until realized, and are therefore temporary differences which should be recognized as deferred income taxes for accounting purposes Now let’s discuss Case 11-3 in class * For Friday Tutorial Try: Problem 11-1: integrated/self-sustaining – 100% owned Problem 11-4: integrated/self-sustaining – 90% owned and acquisition differential exists * . I * Translation Under IAS 29 – Highly Inflationary Economies For self-sustaining operations deemed to be in a hyper-inflationary economy, the following translation procedures apply: 1) all amounts (i.e. assets, liabilities, equity items, income, and expenses for current ye