Outsourcing

Outsourcing refers to a situation where an entity contracts an outside organisation to perform part of a manufacturing process or another function normally undertaken within the entity. Outsourcing may refer to an entity’s decision to make a particular component in house or to buy that component externally. Typically, however, outsourcing refers to longer term arrangements. …

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How to translate the financial statements of a foreign subsidiary under IAS 21

Statement of Financial Position At the end of the financial year, the SOFP of the overseas subsidiary will be translated using the closing rate (i.e. the exchange rate at the date of the balance sheet) For opening net assets, these were translated in last year’s financial statements at last year’s closing rate and must be retranslated for …

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Foreign Exchange transactions at an individual company level under IAS 21

When a company enters into transactions in a currency that’s different to its functional currency (i.e. a foreign exchange transaction), the results of these transactions should be translated and recorded in the company’s accounting records in its functional currency. The company can use either: the spot exchange rate on the date the transaction occurred, or Using an …

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