Lotus Limited was incorporated in India and its functional currency is INR (₹). It owns 80% interest in foreign entity, namely, Jasmine Limited,…

As per paragraph 48 and 48B of Ind AS 21 on the disposal of a foreign operation, the cumulative amount of the exchange differences relating to that foreign operation recognised in other comprehensive income and accumulated in the separate component of equity, shall be reclassified from equity to profit and loss (as a reclassification adjustment) when the gain or loss on disposal is recognised (see Ind AS 1, Presentation of Financial Statements). Further, the standard states that on disposal of a subsidiary that includes a foreign operation, the cumulative amount of the exchange differences relating to that for an operation that have been attributed to the non-controlling interest shall be derecognised but shall not be reclassified to profit and loss. Where the subsidiary is partially owned (that is, where a non-controlling interest exists) and the parent has sold its entire interest, the amount of the cumulative translation adjustment (CTA) that has been allocated to the non-controlling interest derecognised, but it is not transferred to profit and loss. De-recognition of the non-controlling interest (that includes the non-controlling interest share of the CTA will form part of the journal entry to recognise the gain or loss on disposal of the subsidiary. In Lotus Limited consolidated financial statements, the following amounts (in thousands) have been recognised in relation to its investments in Jasmine Limited: net assets of 6,000 and associated non-controlling interest of 1,200;foreign exchange gains of 1,350 were recognised in other comprehensive income of which 270were attributable to non-controlling interests; 1,080 of foreign exchange gains have been accumulated in a separate component of equity relating to Lotus Limited's 80% share in Jasmine Limited. Lotus limited sells its 80% interest in Jasmine Limited for 5,200 thousand and records the following amounts: in 000 Cash /bank account Dr. 5,200 Non-controlling interest Dr. 1,200 Foreign Currency Translation Reserves (OCI) Dr. 1,080 To Net Assets 6,000 To Profit on disposal 1,480 (1,080 + (5,200-4,800) It can be seen that - 1,080 of the foreign currency gains previously recognised in OCI i.e. the amount attributed to Lotus Limited is reclassified to profit and loss (profit on disposal) and adjusted from OCI. However,270 of such gains attributed to the non-controlling interest is not reclassified to profit and loss and is recognised as a part of the NCI balance.