Work out translation effects and assess how the income statement and balance sheet of a subsidiary are restated in the parent's presentation currency

Translation is mechanical once rates are assigned. Under the current rate method, net assets are exposed: the translation adjustment for the year equals opening net assets times the change in closing rate, plus the effect of retained profit translated at the average rather than the closing rate. It can also be found as the balancing figure that makes translated assets equal liabilities plus equity. Under the temporal method only net monetary items are exposed; the remeasurement gain or loss is the balancing figure that reconciles retained earnings, and it passes through net income. Rates quoted as presentation currency per foreign unit are multiplied; a rate quoted the other way must be divided, and mixing these up is the classic error.