Written by: Barbora Choi on Tue Nov 11
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 21 takes care of accounting for and translation of foreign exchange rates in separate and consolidated financial statements.
"When you have seen one ant, one bird, one tree, you have not seen them all."
Foreign exchange differences remind me of ants. Tiny (& overlooked) when one, powerful when many.
Recent controversy surrounding the request to IFRC concerning the treatment of Intragroup Foreign Exchange differences arising from translation of monetary items (a loan), proves the point.
Committee itself was divided 50:50 in favour of:
- operating profit or loss as default vs. the same category in which the income and expenses from the intragroup loan would have been classified before their elimination on consolidation.
headline quote by Edward O. Wilson, biologist and author via Brainyquotes
