foreign exchange recycling

English translation: The difference between the proceeds from the disposal of the subsidiary and its carrying amount as o

12:27 Jun 11, 2015
English language (monolingual) [PRO]
Bus/Financial - Accounting / Consolidated Financial Statements/Annual Report
English term or phrase: foreign exchange recycling
I am translating the Consolidated Financial Statements of a group from English into Hungarian.
The term is used twice in the auditor's report:
- The auditors checked whether 'foreign exchange recycling' was calculated where relevant.
- The auditors considered foreign exchange reserve recycling as one of the areas relevant for recognizing disposals.

I am not sure what recycling means here, so it's practically an accounting question, but perhaps experienced financial translators can help me.

It seems from IAS 1 that recycling means recognizing something against profit or loss, please see here: http://www.iasplus.com/en/standards/ias/ias1

Ideas so far:
- Does it mean recognizing the exchange differences (e.g. from the conversion of currency items at the end of the year) in profit or loss i.e. on the income statement, or
- Does it mean reporting this difference as accruals/prepayments? (as suggested by a Hungarian colleague, albeit not so confidently)

Thanks in advance for any ideas.

Annamaria
Annamaria Amik
Local time: 12:47
Selected answer:The difference between the proceeds from the disposal of the subsidiary and its carrying amount as o
Explanation:
The difference between the proceeds from the disposal of the subsidiary and its
carrying amount as of the date of disposal, excluding the cumulative amount of any exchange differences that
relate to a foreign subsidiary recognized in equity in accordance with Section 30 Foreign Currency Translation, is
recognized in the consolidated statement of comprehensive income (or the income statement, if presented) as
the gain or loss on the disposal of the subsidiary”. The word ‘excluding’ should be interpreted as ‘not taking
the exchange difference into account in measuring the gain or loss on disposal’.
Selected response from:

Octavio Garcia
Mexico
Local time: 02:47
Grading comment
Thanks!
3 KudoZ points were awarded for this answer



SUMMARY OF ALL EXPLANATIONS PROVIDED
4 +1The difference between the proceeds from the disposal of the subsidiary and its carrying amount as o
Octavio Garcia


  

Answers


2 hrs   confidence: Answerer confidence 4/5Answerer confidence 4/5 peer agreement (net): +1
The difference between the proceeds from the disposal of the subsidiary and its carrying amount as o


Explanation:
The difference between the proceeds from the disposal of the subsidiary and its
carrying amount as of the date of disposal, excluding the cumulative amount of any exchange differences that
relate to a foreign subsidiary recognized in equity in accordance with Section 30 Foreign Currency Translation, is
recognized in the consolidated statement of comprehensive income (or the income statement, if presented) as
the gain or loss on the disposal of the subsidiary”. The word ‘excluding’ should be interpreted as ‘not taking
the exchange difference into account in measuring the gain or loss on disposal’.


    Reference: http://www.ifrs.org/IFRS-for-SMEs/Documents/IFRSforSMEsFinal...
Octavio Garcia
Mexico
Local time: 02:47
Specializes in field
Native speaker of: Native in EnglishEnglish, Native in SpanishSpanish
PRO pts in category: 3
Grading comment
Thanks!
Notes to answerer
Asker: Thanks a lot! So my initial hunch seems to be confirmed i.e. whatever it is, it is recognized in the income statement.


Peer comments on this answer (and responses from the answerer)
agree  Charlesp: sounds right
1 hr
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