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International Accounting Standards (IAS)
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| U.S. GAAP | IFRS, IAS | Accounting Topics |
International Accounting Standard (IAS) 21
The Effects of Changes in Foreign Exchange Rates
International Financial
Reporting Standards (IFRS) |
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International Accounting
Standards (IAS) |
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U.S. GAAP by Topic |
| International Accounting Standard (IAS) 21 |
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IAS 21
The Effects of Changes in Foreign Exchange Rates IAS 21 first issued in July
1983 IAS 21 revised in December 2003 Recent amendment: by IAS
27 amended in January 2008 |
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Functional Currency --> currency of primary economic environment --> operations are carried out in functional currency Presentation Currency--> financial statements are prepared in presentation currency |
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Translation from functional
currency to presentation currency (1) Assets and liabilities --> closing rate --> spot exchange rate at the end of reporting period (2) Income and expenses --> exchange rates at transaction dates --> average rate for the period is allowed, if reasonable |
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Initial recognition of foreign
currency transaction --> recorded in functional currency --> using the spot exchange rate between foreign currency and functional currency --> at transaction date |
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At the end of reporting period (1) foreign currency monetary items --> translated using closing rate (2) non-monetary items measured by historical cost (in a foreign currency) --> translated using exchange rate --> at transaction date (3) non-monetary items measured by fair value (in a foreign currency) --> translated using exchange rate --> at the date --> when the fair value was determined |
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Exchange differences on a
monetary item --> recognized in profit or loss For a
non-monetary item (1) if a gain or loss is recognized in other comprehensive income --> exchange component of such a gain or loss --> recognized in other comprehensive income (2) if a gain or loss is recognized in profit or loss --> exchange component of such a gain or loss --> recognized in profit or loss |
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Foreign
currency derivatives and hedge accounting --> covered by IAS 39 Financial Instruments: Recognition and Measurement. --> not covered by IAS 21 |
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IAS
21 Technical Notes |
