34) Technical - Our company wanna present financials in foreign currency. help us...

Sunday, August 16, 2009

HINT:
As IFRS are applicable optional from 2009 and compulsorily from 2011 so I' ll be provoiding more detail relating to it. Here IAS 21 (The Effects of Changes in Foreign Exchange Rates) is to be discussed. I ll just provide overview of it hereunder:
.
IAS - 21 (The Effects of Changes in Foreign Exchange Rates)
Issued in :
  • December 2003
Applicable from:
  • Financial Year beginning on or after 1 January 2005
Purpose:
  1. How to incorporate “Foreign Currency Transactions” and “Foreign Operations” in the financial statements of an entity and
  2. How to translate financial statements into a “Presentation Currency”.
Procedure:
  1. Determine functional currency
  2. Translate all foreign currency items into its functional currency
  3. Report the effects of such translation in accordance with [IAS 21. 20-37 and 50]
Guides:
  1. Which exchange rate(s) to use and
  2. How to report the effects of changes in exchange rates in the financial statements

Not applicable to:

  1. Foreign currency derivatives and hedge accounting of foreign currency items covered by IAS 39 (Financial Instruments: Recognition and Measurement)
  2. Presentation of a cash flow statement of cash flows arising from transactions in a foreign currency, or to the translation of cash flows of a foreign operation as per IAS 7 (Cash Flow Statements)

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