The procdure seems to become straight forward, uncomplicated and non complex on very first thought. Nevertheless, the reconciliation can turn into a complicated process and resulting from:
- impairment already been recorded for cost of investment
- variance exchange rate was applied to translate the funding (i.e. investor applied exchange rate A, when investee applied exchange B)
- funding remitted or received will not be recorded in proper account, and so forth
This reconciliation excercise enable to make sure that acceptable figures are recorded in particular source of ledger, and make sure that proper elimination are performed at group level.