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An entity has share of cumulative exchange differences ₹10,000 in OCI relating to a foreign-operation associate. Now the entity SELLS its entire investment (equity method ceases). The treatment of the OCI is:
ATransferred directly to retained earnings without P&L impact
BRetained in OCI permanently
CReclassified to P&L on the same basis as if the investee had directly disposed of its foreign operation
DWritten off to goodwill
Answer & Solution
Correct answer: C. Reclassified to P&L on the same basis as if the investee had directly disposed of its foreign operation
Ind AS 28: on discontinuation of equity method, OCI is recycled to P&L on the same basis the investee would have applied on direct disposal of related assets/liabilities. Foreign-operation translation reserves ARE reclassifiable per Ind AS 21.
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