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Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015
book

Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015

by Steven Collings
April 2015
Intermediate to advanced content levelIntermediate to advanced
546 pages
17h 36m
English
Wiley
Content preview from Interpretation and Application of UK GAAP: For Accounting Periods Commencing On or After 1 January 2015

Chapter 28Foreign Currency Translation

  1. Introduction
  2. Functional Currency
  3. Presentation Currency
  4. Monetary and Non-Monetary Items
  5. Net Investment in a Foreign Operation
  6. Disclosure Requirements

Introduction

In today's modern business environment, entities undertake business around the world. The advantage of cheaper prices, better quality products and wider access to customers means that companies are not just confined to doing business in their domestic base. This is where foreign currency issues will become relevant to the entity. A company might purchase goods and/or services from a supplier that is based overseas; conversely, the company might sell goods and/or services to one of its customers that is located in an overseas jurisdiction. In more complex situations, a company might undertake overseas transactions through subsidiaries and associates as well as branches of their operations.

Section 30 Foreign Currency Translation deals with the issues concerning foreign currency. The section acknowledges that reporting entities may have transactions denoted in foreign currency or alternatively the entity itself may have foreign operations (i.e. a subsidiary or subsidiaries based overseas). The reporting entity may also present its financial statements in a foreign currency (for example, in US dollars).

When a company undertakes transactions that are denoted in a foreign currency, the transactions must be translated into the currency of the company undertaking the purchase. For ...

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Publisher Resources

ISBN: 9781118819258Purchase book