Foreign transactions

Question 1

Initial measurement

Answer 1

Spot rate on transaction date

Avg rate if transactions occur evently and rates do not fluctuate significantly

Interest expense is translated using the avg rate

Question 2

Subsequent measurement

Answer 2

B/S Items

monetary items translated using closing rate on b/s date. g/l -> net income

non-monetary items - historical cost.

Question 3

Derecognition

Answer 3

Monetary items are revalued using the spot rate on the derecognition date and then derecognized normally

Question 4

Disclosures… IAS 21

Answer 4

Functional currency

amount of foreign g/l in the income statement

If there was a change in functional currency - provide reasoning.