UK GAAP for Business and Practice
Complete with summaries of current standards and key implementation dates, this book provides a concise and easily accessible guide to all the recent changes in UK GAAP, and their likely practical impact.
TABLE OF CONTENTS UK GAAP for Business and Practice
Chapter 28: Accounting for Overseas Operations
28.1 Introduction
This chapter follows the approach of SSAP 20 in dealing separately with two aspects of the subject:
-
Overseas business transactions entered into by individual companies. This includes overseas borrowings and purchases from overseas suppliers. This aspect is dealt with in section 28.2.
-
The foreign operations of a UK company conducted through foreign enterprises, whether they be subsidiaries, associated companies or branches. This aspect is dealt with in the remaining parts of the chapter, and revolves mainly around the preparation of consolidated financial statements.
28.2 Accounts of Individual Companies
a Objective
A company may enter into transactions which are denominated in a foreign currency. For example, a UK company may borrow $100,000 repayable in ten years' time. At each balance sheet date it will be necessary to express this in sterling for inclusion in the UK balance sheet expressed in sterling.
It is important to remember what we are trying to achieve. SSAP 20 states that "the translation of foreign currency transactions should produce results which are generally compatible with the effects of rate changes on a company's cash flows and its equity and should ensure that the financial statements present a true and fair view of the results of management actions "
b Basic Rule
Assuming a UK company, the results of each transaction should normally be translated into sterling using the exchange rate in operation on the date on which the transaction occurred.
In certain circumstances, it may be acceptable to use an average rate for...
Copyright Elsevier Ltd. 2006 under license agreement with Books24x7
