Summary
Summary Foreign Exchange IAS 21
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Accounting for foreign exchange assets and liabilities as well as gains or losses arising thereof.
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ForeignCurrency
Determining the functional Currency
Primary indicators
Currency in which prices the sales prices are quoted
Currency of the country in which its operates
Currency in which cost you pay for labour or materials
Secondary indicators
Currency in which financing activities are conducted
Currency in which receipts from operating activities are retained
Transaction date =
SHIPPING DATE / FREE ON-BOARD DATE
Translations
1. On date of transaction
2. On date of PMT
3. On reporting date if before PMT
Monetary items: Debtors, creditors = translate
Non-monetary items: PPE, inventory = Do not translate
**Depreciation should be based on initial forex amt unless reval model is used
The average rate must be used to calculate interest
Calculate changes in forex based on Forex amt not the Rand translated amt
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