《IAS 21 The Effects of Changes in Foreign Exchange Rates》由会员分享，可在线阅读，更多相关《IAS 21 The Effects of Changes in Foreign Exchange Rates（33页珍藏版）》请在金锄头文库上搜索。
1、IAS 21The Effects of Changes inForeign Exchange RatesFOREIGN ACTIVITIESTransactions in foreign currenciesForeign operations SubsidiariesAssociatesJVsBranches Entity may present its financial statements in foreign currencyPRINCIPAL ISSUESn nWhich exchange rates to be used ?n nHow to report effects of
2、 changes in exchange rates ? CONTENTSScopeDefinitionsForeign currency transactionsForeign currency financial statementsDisclosureSummarySCOPEStandard applicable toa) All foreign currency transactions & balances in foreign currencies except derivative transactions & balances within the scope of IAS 3
3、9/IFRS 9SCOPE (Contd.)b) Translating results/financial position in foreign operation for the purpose of consolidation - CFS proportionate consolidation JVs equity accounting Associatec) Translating results/financial position into presentation currency. IAS 21 DefinitionsFunctional Currency The curre
4、ncy of the primary economic environment in which the entity operatesForeign Currency A currency other than the functional currency of an entityPresentation Currency The currency in which the financial statements are presentedDetermination of functional currency -Primary factorsCurrency that influenc
5、es Labour, material, other costsCurrency in which funds from financing activities are generatedCurrency in which operating cash receipts are retainedCurrency of the country whose economy determines sale prices of goods and servicesCurrency that influences sales prices (often denomination currency)Fu
6、rther evidenceDetermination of functional currency - Additional factors for foreign operationsForeign operation is an entity that is a subsidiary, associate, joint venture or branch of a reporting entity, the activities of which are based or conducted in a country or currency other than those of the
7、 reporting entity.Influence of cash flows on parents cash flowsFinancial autonomy compared with parentDegree of operational independence from parentProportion of transactions with parentChoice of functional currency?An entity does not have a free choice of functional currencyAn entity cannot change
8、functional currency unless facts and circumstances relevant to its determination changeIAS 21 functional currency - SummaryPrimary economic environment:Currency and economy influencing sales prices and operating costsCurrency in which financing funds are received and operating receipts are retainedE
9、xtent of integrationwith reporting entity (foreign operations only)Primary indicatorSupporting evidenceMixed indicators? Use Judgement to choose FC that most faithfully presents economic effects of underlying transactionsReporting foreign currency transactions in the functional currency Initial reco
10、gnitionRecognise transaction at the rate at the transaction dateMay use e.g. average rate for week or month as a practical approximation Average rates not reliable if currency fluctuates significantly In accounting policy note in FS disclose the policy, e.g. that rates at transaction dates are usedM
11、onetary AssetsCashCashCash equivalentsCash equivalentsDebt securitiesDebt securitiesAccounts receivableAccounts receivableNotes receivableNotes receivableItems that will be received in a fixed or determinable amount of cashNon-monetary AssetsInventory Prepaid expensesEquity securitiesInvestment prop
12、ertyProperty, plant, and equipmentIntangible assets (e.g. goodwill) Items that will not be received in a fixed or determinable amount of cashMonetary LiabilitiesAccounts payableAccounts payableNotes payableNotes payableBonds payableBonds payableLeases payableLeases payableAccrualsAccrualsDeferred ta
13、x (usual classification) Deferred tax (usual classification) Items that will be received in a fixed or determinable amount of cashNon - monetary LiabilitiesDeferred incomeDeferred incomeGovernment grantGovernment grantItems that will not be received in a fixed or determinable amount of cashReporting
14、 foreign currency transactions in the functional currency Subsequent measurementMonetaryItemsNon - monetaryItems at historical costRevalued non-monetary itemsRate at the reporting dateRate at the date of transactionRate at the date of valuationReporting foreign currency transactions in the functiona
15、l currency carrying amount determined by comparing two amountsCost or Cost or Carrying amountCarrying amountNet realisable Net realisable value or recoverable value or recoverable amountamountHistorical rate OR rate Historical rate OR rate at the date of the at the date of the measurement/valuationm
16、easurement/valuationRate at the date that the Rate at the date that the amount is determined amount is determined (e.g. reporting date)(e.g. reporting date)Comparison Comparison withwithMonetary Assets Exchange gains and lossesMonetary AssetsRealisedRealisedExchange differencesExchange differencesRe
17、cognised in P/L (both Recognised in P/L (both gains and losses)gains and losses)UnrealisedUnrealisedExchange differencesExchange differencesNon monetary assets Exchange gains and lossesNon-monetary assetsNon-monetary assetsUnderlying income/expenseUnderlying income/expenserecognized in P/Lrecognized
18、 in P/LUnderlying income/expenseUnderlying income/expenserecognized in recognized in other comprehensive incomeother comprehensive incomeExchange component Exchange component Recognised in P/LRecognised in P/LExchange component Exchange component Recognised in other Recognised in other comprehensive
19、 incomecomprehensive incomeExchange differences Net investments in a foreign operationNet investment in a foreign operation- the amount of the entitys Net investment in a foreign operation- the amount of the entitys interest in the net assets of that foreign operationinterest in the net assets of th
20、at foreign operationIf the settlement of monetary item receivable from or payable to a If the settlement of monetary item receivable from or payable to a foreign operation is neither planned nor likely to occur in the foreign operation is neither planned nor likely to occur in the foreseeable future
21、, exchange differences on such item are foreseeable future, exchange differences on such item are recognised :recognised :n nIn profit or loss by both the reporting entity and the foreign In profit or loss by both the reporting entity and the foreign operation in their individual financial statement
22、soperation in their individual financial statementsn nIn other comprehensive income and accumulated in a separate In other comprehensive income and accumulated in a separate component of equity in the consolidated financial statementscomponent of equity in the consolidated financial statements Accum
23、ulated exchange differences are reclassified from equity Accumulated exchange differences are reclassified from equity to profit or loss on disposal of the foreign operationto profit or loss on disposal of the foreign operationChange in functional currencyOnly if there is a change to the underlying
24、transactions, events and conditionsTranslation Translation procedures procedures should should be be applied applied to to the the new new functional functional currency currency prospectively prospectively from from the the date date of of the the changechangeRemeasurement into the Functional Curre
25、ncyRemeasurement is a process of converting the accounting records of an entity maintained in a currency other than functional currency into the functional currencyNon-monetary assets, liabilities, and related income and expenses - use historical exchange rate Monetary assets, liabilities, and relat
26、ed income and expenses use current exchange rateIf entitys functional currency is the reporting currency of the enterprise, remeasurement obviates translation.If entitys functional currency is different from the enterprises reporting currency, remeasurement into the entitys functional currency is fo
27、llowed by translation into the reporting currency.Translation to the presentation currencyAssets and liabilitiesIncome and expensesRates at reporting dateRate at date of transaction(or average rate)All resulting exchange differences classified as a separate component of equityReclassify to P/Lon dis
28、posalForeign Currency Translation AdjustmentsDo not affect cash flowsAre reported (net of tax) as a separate component of equity (in OCI)Are recognized in earnings when realized (i.e. when investment in subsidiary is sold or liquidated)At which time, reclassify proportionately to gain/loss on sale o
29、r liquidation of net assets of subsidiaryTranslation of a Foreign OperationIn addition to above, following procedures:In addition to above, following procedures:vvNormal consolidation proceduresNormal consolidation proceduresvvElimination of intra-group monetary asset/liabilityElimination of intra-g
30、roup monetary asset/liability - not without showing results of currency fluctuations - not without showing results of currency fluctuations in consolidated P&L or consolidated OCI in consolidated P&L or consolidated OCIvvDifference in dates adjustments after considering Difference in dates adjustmen
31、ts after considering exchange rateexchange ratevvGoodwill/FV adjustments on consolidation closing Goodwill/FV adjustments on consolidation closing raterateSignificant DisclosuresExchange rate differences included in:P/L (except for financial instruments measured at FV)Other comprehensive incomeIn ac
32、counting policy note disclose that P/L items are translated at rate at transaction datesAdditional disclosuresReasons (if applicable):Why there has been a change in the functional currencyWhy the presentation and functional currency are differentIf entitys presentation currency is different from its
33、 functional currency, its financial statements should only be described as compliant with IFRSs if all the requirements of IAS 21 are appliedAdditional disclosures (continued)If entitys additional financial information is displayed in a currency different from either its functional or its presentati
34、on currency and all the requirements of IAS 21 have not been met:Clearly identify such information as supplementaryDisclose the currency of the supplementary informationDisclose the entitys functional currency and the method of translation used as a basis for presenting the supplementary information
35、SummaryAn entity does not have a free choice of functional currencyTranslation of foreign currency assets and liabilitiesMonetary items at the reporting dateNon-monetary items at the date of transaction or revaluationUnrealized and realized exchange gains and losses recognized in P/LSummary (Contd.)
36、Monetary item forming part of a net investment in foreign operationExchange differences recognized in - other comprehensive income in the consolidated financial statements- P or L in separate financial statementsTranslation into presentation currencyAssets and liabilities at the reporting dateIncome
37、, expenses and capital transactions at transaction datesTranslation gain or loss recognized in other comprehensive incomeSummary (Contd.)Goodwill and fair value adjustments arising from the acquisition of a foreign entity are treated as assets/liabilities of the foreign operation translated at the rate at the reporting dateThank You !
