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Sale of foreign subsidiary (CTA)

edited Nov 28, 2019 11:51AM in Accounting / ERP

We are disposing of a subsidiary and taking a total loss on the sale.  (Credit to Asset, Debit to Loss)

This subsidiary is in a different currency from the parent company and so there are CTA implications.

Since I am recording the credit to equity on the subs books in local currency on the date of investment, the equity is recorded at historical rates. But now when I go to debit the equity at todays rate, there is a residual difference due to translation.

100EUR @ 1.5 = 150 USD (investment date)
100EUR @ 1.2 = 120 USD (today's date)

When I debit equity for 100 EUR, I am left with 0 in equity (local currency).  But when it is translated back to USD there is still 30 USD left in equity.

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