f7课件f7课件16 ias21_W

1、Foreign currencyFunctional currencyDefinition (IAS 21)The currency of the primary economic environment in which the entity operates.It is the currency in which the financial statement transactions are measured.Determining an entitys functional currencyAn entity considers the following factors in det

2、ermining its functional currency.a) The currency:I. that mainly influences sales prices for goods and services (this will often be the currency in which sales prices for its goods and services are denominated and settled); andII. of the country whose competitive forces and regulations mainly determi

3、ne the sales prices of its goods and services.b) The currency that mainly influences labour, material and other costs of providing goods or services (this will often be the currency in which such costs are denominated and settled).The following factors may also provide evidence of an entitys functio

4、nal currency.a) The currency in which funds from financing activities are generated.b) The currency in which receipts from operating activities are usually retained.Reporting foreign currency transactions in the functional currencyWhere an entity undertakes a transaction which is not in its function

5、al currency this is known as a foreign currency transaction.The foreign currency transaction must be converted into the entitys functional currency before it can be recognised in the financial statements.Initial recognitionTranslate each transaction by applying the spot exchange rate between the fun

6、ctional currency and the foreign currency at the date of the transaction.Note that an average rate for a period may be used as an approximation if exchange rates do not fluctuate significantly.At the end of the reportingperiodSome values may need to be translated at the end of the reporting period d

7、epending on the nature of the item in the financial statements:ItemAccounting teatmentMonetary assets and liabilities.Restate at closing rate.Non-monetary assets measured at historical cost (e.g.: non-current assets, inventories).Do not restate - these items remain at historical rate.Non-monetary as

8、sets measured at fair value.Restate at exchange rate when the fair value was determined.Recognition of exchangedifferencesExchange differences are recognised as part of profit or loss for the period in which they arise.Any differences that relate to items charged to Other Comprehensive Income, such

9、as revaluations, should also be charged to OCI.Lecture exampleSan Francisco Co, a company whose functional currency is the dollar, entered into the following foreign currency transaction.31.10.X8Purchased goods from Mexico SA for 129,000 Mexican pesos31.12.X8Payables have not yet been paid 31.01.X9S

10、an Francisco Co paid its payables.The exchange rates are as follows.Pesos to $131.10.X89.531.12.X81031.01.X99.7RequiredHow would this transaction be recorded in the books of San Francisco Co for the year ended 31 December 20X8?A. Dr Payables 12,900 Cr Purchases 12,900B. Dr Payables 1,358 Cr Purchase

11、d 1,358C. Dr Purchases 13,579 Cr Profit or loss 13,579D. Dr Payables 679 Cr Profit or loss 679SolutionD$31.10.X8Purchases (129,000 9.50)13,579Payables13,57931.12.X8Payables (Working)679Profit or loss - exchange679gains31.01.X9Payables12,900Profit or loss - exchange399lossesCash (129,000 9.7)13,299Wo

12、rking$Payables as at 31.12.X8 (129,000 10)12,900 Payables as previously recorded13,579Exchange gain679Q51- Rose(06/11) - Question(c) Rose has a property located in the same country as Stem. The property was acquired on 1 May 20X7 and is carried at a cost of 30 million dinars. The property is depreci

13、ated over 20 years on the straight-line method. At 30 April 20X8, the property was revalued to 35 million dinars. Depreciation has been charged for the year but the revaluation has not been taken into account in the preparation of the financial statements as at 30 April 20X8.The following exchange r

14、ates are relevant to the preparation of the group financial statements.Dinars to $1 May 20X7630 April 20X85Average for year to 30 April 20X85.8.Q51- Rose(06/11) - AnswerW3 Foreingn propertyDinarDinar:$2007/05/013065Dep-0.252008/04/304.752.25Revalued amount3557DRCRPPEOCE2.252.25OT 1B213 IAS21Steeplec

15、hase sold a machine to a Greek company which it agreed to invoice in . The sale was made on 1 October 20X6 for 250,000.125,000 was received on 1 November 20X6 and the balance is due on 1 January 20X7.The exchange rate moved as follows:1 October 20X6 0.91 to $11 November 20X6 0.95 to $1 31 December 2

16、0X6 0.85 to $1At what amount will the receivable be shown in the financial statements at 31 December 20X6?$(to the nearest $)(2 marks)B213Answer $147,059125,000 / 0.85Bravado - Question(e) On 1 June 20X7, Bravado purchased an equity instrument of 11 million dinars which was its fair value. On that d

17、ate an election was made to hold it at fair value through other comprehensive income. The relevant exchange rates and fair values were as follows:Fair value of$ to dinarsinstrument dinars1 June 20X74.51131 May 20X85.11031 May 20X94.87Bravado has not recorded any change in the value of the instrument

18、 since 31 May 20X8. The reduction in fair value as at 31 May 20X9 is deemed to be as a result of impairment.Bravado - AnswerW3 Foreign transation - IEIDinar$:Dinar$2008/5/31105.151OCI-17.42009/05/3174.833.6DRCRIEI17.4OCI17.4B214 IAS21IAS 21 sets out how entities that carry out transactions in a foreign currency should measure the results of these transactions at the year end.At what exchange rate should non-monetary items carried at historical cost