I still don’t understand.
A Consolidation (now moving away from the FX translation topic) is a year-end one -off exercise. Following year-end, the parent and the subsidiary perform their accounting exercises independently throughout the year. when it comes to consolidation, there is no “recon” between the last consolidation and the new consolidation.
Drawing an analogy to the FX translation: It seems that we need some sort of “recon” between the yearly Translations, because considering 3.2.3. and also the table on page 277, we would have to maintain a separate record of the R/E-at year end - in translated currency, so we can use it for next year to determine the new R/E (by adding NI + Divs).
However, the problem I have is the following:
Under Current Method, we determine the translated NI, put it in the BS and plug with the Translation G/L. If there was (assuming) a position “R/E”, then we would have taken the previous year translated R/E, used the translated NI, deducted the Divs and got the new R/E (which in turn determines together with the translated NI the final translation G/L).
But under Temporal Method, the B/S is first plugged and subsequently the NI is adjusted, so it “fits the B/S plug”. Assuming here we also have a position “R/E” from previous year, I see the problem that we cannot use the prev. year translated R/E in order to add NI (and deduct Div, but let’s ignore here because not the relevant part of the problem) in order to get the new R/E, because we don’t have Ni yet - we can only determine after translaing the whole B/S including the capital stock and R/E. This seems like a circularity.
Does anyone see the light?