International Financial Reporting Standards (IFRS)

IFRS for Small and Medium-sized Entities (SMEs)
Section 30: Foreign Currency Translation

1. Functional currency
--> currency of the primary economic environment
--> where the reporting entity operates

2. Foreign currency transactions
--> translated into functional currency
--> using spot exchange rate at the date of transaction

3. At the end of each reporting period

(1) foreign currency monetary items
--> translate using the closing rate

(2) foreign currency non-monetary items measured at historical cost
--> translate using the exchange rate
--> at the date of transaction

(3) foreign currency non-monetary items measured at fair value
--> translate using the exchange rate
--> at the date when fair value was determined

4. Financial statements are prepared in presentation currency.

5. If presentation currency is not functional currency
--> translate to presentation currency

6. Assets and liabilities
--> translate at the closing rate
--> at the date of statement of financial position

7. Income and expenses
--> translate at (A) or (B)
--> (A) exchange rates at the dates of transaction

--> (B) average rate for the period
--> (B) can be used only if exchange rates do not fluctuate significantly

8. Exchange differences from (C) are
--> recognised in Other Comprehensive Income (OCI)
--> (C) translation from functional currency to presentation currency