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.