Chapter 17

Foreign exchange

1 Introduction

1.1 Background

1.2 Development of an international standard

1.2.1 IAS 21

1.2.2 IAS 21 (Revised 2003)

1.2.3 Subsequent amendments

1.2.4 SIC and Interpretations Committee pronouncements

2 IAS 21: Objective, Scope and Definitions

2.1 Objective of the standard

2.2 Scope

2.3 Definitions of terms

3 Summary of the Approach Required by IAS 21

4 Determination of An Entity’s Functional Currency

4.1 General

4.2 Intermediate holding companies or finance subsidiaries

4.3 Investment holding companies

4.4 Documentation of judgements made

5 Reporting Foreign Currency Transactions in the Functional Currency of an Entity

5.1 Initial recognition

5.1.1 Identifying the date of transaction

5.1.2 Using average rates

5.1.3 Dual rates or suspension of rates

5.2 Reporting at the end of subsequent reporting periods

5.3 Treatment of exchange differences

5.3.1 Monetary items

5.3.2 Non-monetary items

5.4 Determining whether an item is monetary or non-monetary

5.4.1 Deposits or progress payments

5.4.2 Investments in preference shares

5.4.3 Foreign currency share capital

5.4.4 Deferred tax

5.4.5 Post-employment benefit plans – foreign currency assets

5.4.6 Post-employment benefit plans – foreign currency plans

5.5 Change in functional currency

5.6 Books and records not kept in functional currency

6 Use of a Presentation Currency Other Than the Functional Currency

6.1 Translation to the presentation currency

6.1.1 Functional currency is not that of a hyperinflationary ...

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