Summary

Unilever is Anglo-Dutch multinational consumer goods based in England and The Netherlands.
Unilever provides food, beverages, cleaning agents and personal care. However Unilever is
operating more than 100 nations.
Here we have chosen Unilever Pakistan Limited and Hindustan Unilever Limited for the
assignment. The objective of the assignment is to translate the subsidiary balance sheet into
the currency of the mother company.
There are three methods for accounting translation
i.

Current/Non-current Method

ii.

Monetary/Non-monetary Method

iii.

Currency Rate Method

We have selected Currency Rate Method for translation, where all the item of balance sheet is
converted by current rate except equity. However, the equity is converted into historical rate,
which means at the time the company incorporated or the time of IPO. Here we choose the
average exchange rate of Pakistani Rupee and British Pound Sterling, Indian Rupee and British
Pound Sterling from the period 30-10-2012 to 30-10-2013. On the other hand for the current
rate we have chosen the exchange rate of the date 30-10-2014. The result of translation is
following:

Hindustan Unilever Limited:

Hindustan Unilever limited has total balance sheet results is Indian Rupee 11,512.47. When
company consolidated the balance sheet in their parent current currency rate, they faced the
translation exposure problem. Here, we have chosen three currency rates, one is historic rate
(GBP 0.01) and two is current rate of currency (GBP, 0.08, GBP0.12) in their market. When
Historic rate is depreciate against current rate, Organization has a positive net exposure
amount of 26445.375 which indicates that company net long in a currency. Elaborately,
company has more exposed assets than liabilities when foreign currency will fall in value

against domestic currency (assets will be worth less in the domestic currency). On the other
hand, when current rate is appreciated against historic rate, organization has a negative net
exposure which indicates net short in a currency. For this, risk is that foreign currency will rise
against the domestic currency (liabilities will be worth more than assets).

Pakistan Unilever Limited:

Unilever Pakistan Limited shows that total balance sheet results in their country are Pak. Rupee
21,765,298. When Company consolidated their balance sheet with their parent company, they
faced the translation exposure problem. Here, we took three currency rates GBP 0.006, 0.0062
and 0.0065. Among them GBP 0.0062 is the historic rate, GBP 0.006 and GBP 0.0065 is the
current rate of the market in their country. When currency rate is depreciate against historic
rate, company has a positive net exposure amount of Pak Rupee 30, 57,985 reflects that they
are net long in a currency. In a broad sense, Organization has more exposed assets than
exposed liabilities. As a result, Organization has a chance to face the risk when foreign currency
will fall in value against the domestic currency (assets will then be worth less in the domestic
currency. On the other hand, when historic rate is lower than current rate or appreciate,
organization has a negative net exposure amount of Pak Rupee is -45,86,965which indicates
that they are net short in a currency. For this, risk is that foreign currency will rise in value
against the domestic currency (liabilities will then be worth more and the domestic currency).