foreign exchange Flashcards
functional currency
currency you must use in primary economic environment in which the entity operates
no choice
primary environment
environment in which the entity primarily generates and spends cash
presentation currency
currency in which financial statements are presented
free choice
transaction date
date transaction first qualifies for recognition with reference to relevant IFRS standard
free on boards
risk and rewards on the date transferred when goods loaded on the ship at the port of shipment
CIF (carriage insurance and freight)
date when loaded onto the ship at the port of shipment
DAT (delivery at terminal)
when goods offloaded at the destination terminal
DDP (delivery duty paid)
at destination port and import clearance obtained
settlement date
when foreign creditor is fully or partially paid
when full or partial payment received from a foreign debtor
When is a foreign currency transaction initially recognised
initially recognised on transaction date
how is a foreign currency transaction initially measured
foreign currency amount x spot rate on transaction date
can we use the average exchange rate to measure a foreign currency transaction
yes IF it approximates the spot exchange rate
subsequent measurement of monetary items (date)
at the end of each reporting period (restate to closing spot rate)
and
on settlement date
where do we recognise exchange gains and losses
in profit or loss
