Consolidated cash flow

Dear All,

Im presently working on Consolidation of Foreign Subsidiary (Holding Co. being Indian Company).

I have a query with regards Consolidated Cash Flow (AS3).

How will foreign exchange gain/loss be given effect for various items like change in working capital items, etc. be given ? How to record them (At what rate ?) How to restate them (At what rate) ?

Please explain the same in detail.

 

Regards,

Nihar Dharod

Replies (1)

FX impact on each working capital item will be computed on the closing rate and will be adjusted against the movement in each working capital item. All other items of cash flows are reflected at the exchange rate on which the transactions are done. Additions to fixed assets must be shown on the date of purchase of property.

 

Adjustment of FX in cash flow statement is bit critical and complex process. It is difficult to explain in brief about the said process. Please read some text books to acquire further knowledge on this subject.

 

Thanks

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