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  • Unit - 1 S7 T-Foreign Transaction

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    This document discusses the effects of changes in foreign exchange rates according to IAS 21 and provides guidance on accounting for foreign currency transactions and foreign operations in consolidated financial statements. It addresses translating the assets, liabilities, income, and expenses of foreign subsidiaries into the presentation currency at the closing and average exchange rates and recognizing the resulting exchange differences. The document also references a video and chapter that provide additional information on accounting for foreign currency.

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    This document discusses the effects of changes in foreign exchange rates according to IAS 21 and provides guidance on accounting for foreign currency transactions and foreign operations in consolidated financial statements. It addresses translating the assets, liabilities, income, and expenses of foreign subsidiaries into the presentation currency at the closing and average exchange rates and recognizing the resulting exchange differences. The document also references a video and chapter that provide additional information on accounting for foreign currency.

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    1 views1 page

    Unit - 1 S7 T-Foreign Transaction

    Uploaded by

    SAVITHA T (RA2133014011002)
    This document discusses the effects of changes in foreign exchange rates according to IAS 21 and provides guidance on accounting for foreign currency transactions and foreign operations in consolidated financial statements. It addresses translating the assets, liabilities, income, and expenses of foreign subsidiaries into the presentation currency at the closing and average exchange rates and recognizing the resulting exchange differences. The document also references a video and chapter that provide additional information on accounting for foreign currency.

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    of 1

    UIA20502J – Strategic Business Reporting

    Unit 1 Session 7 SLO 1 CLO1

    Effect of changes in Foreign Exchange Rates - IAS 21 (Overseas consolidation


    and overseas transactions)

     Definition
     Functional and Presentation Currencies
     Cash Settlement
     Exchange differences on settlement
     Treatment of year-end balances
     Exchange differences on retranslation of monetary items
     Criticisms of IAS 21
    – Ref SBR Study Test Chapter 7 (Foreign currency in individual financial statements)

    Group Accounts:
    If the group has a subsidiary co. that is located overseas, the functional currency
    (primary economic environment) of the company is different. For consolidation, the
    results are translated into presentational currency.
    Group SPF
    ● Translate all the assets and liabilities of the subsidiary @closing rate (CR)
    ● GW working in overseas currency and translating @closing rate
    ● calculator the exchange differences
    Group P & L and OCI
    ● Translate all the income and expenses of the subsidiary @average rate (AR)

    Video - Foreign Currency

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