SIC - 7 INTRODUCTION TO EUROS

Conversion of foreign Translation of foreign Liabilities denominated

currency financial operations' financial in participating
assets and liabilities statements currencies

Cumulative exchange Carrying value of

Functional currency
differences related assets

CONVERSION RECOGNITION EXCLUSION

Other comprehensive Exchange

Closing rate income until net differences not
investment is sold included

Financial assets Exchange

and liabilities differences
RECOGNITION
denominated in recognized as
foreign currencies income or expense
(except for hedging)

This guidance can be illustrated with the following example:

A US-based company having a subsidiary in Germany

whose financial statements, despite being denominated in
euros, are converted into US dollars for consolidation
purposes.