IAS 21 specifies (IAS 21.3)

  • the translation of foreign currency transactions (e.g. revenue billed in foreign currency, the acquisition of goods or services billed in foreign currency, and the taking up and granting of loans in foreign currency) (see Section 3) as well as
  • the translation of financial statements of foreign operations to another currency when preparing the consolidated financial statements (see Section 4). Foreign operations are subsidiaries, joint ventures, associates or branches of the reporting entity, the activities of which are based or conducted in a country or currency other than those of the reporting entity (IAS 21.8).

IAS 21 does not apply to foreign currency derivatives that are within the scope of IFRS 9. In such cases, IAS 21 applies only with regard to the translation of the corresponding amounts from the functional currency (= currency of the primary economic environment in which the entity operates) to the presentation currency (= currency in which the financial statements are presented) (IAS 21.4). Moreover, IAS 21 does not apply to hedge accounting for foreign currency items (including the hedging of a net investment in a foreign operation) because hedge accounting is dealt with in IAS 39 (IAS 21.5).

IAS 21 does not apply to the presentation in a statement of cash flows of the cash flows arising from transactions in a foreign currency or to the translation of cash flows of a foreign ...

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