IAS 21 The Effects of Changes in Foreign Exchange Rates prescribes how to include foreign currency transactions and foreign operations in the financial statements of an entity, and how to translate financial statements into a presentation currency.
Revised December 2003. Effective 1 January 2005.
Financial Reporting Faculty members get free access to Company Reporting’s CR service. Company Reporting are a leading research and benchmarking service on IFRS reporting practices.
Faculty membership gives you access to a range of other resources, including the hidden premium content on this page.
IAS 21 prescribes the accounting for:
Individual transactions in foreign currencies are initially recorded at the exchange rate prevailing on the date of the transaction. At the date of settlement, cash transferred is recorded at the rate prevailing on the settlement date. Any exchange difference arising is recognised in profit or loss.
The statement of financial position of a foreign operation is translated using the closing rate, being the exchange rate at the reporting date. The statement of profit or loss and other comprehensive income is translated using the exchange rates at the dates of the transactions. Where this is impracticable, an average rate for the year may be used provided that exchange rates do not fluctuate significantly. Exchange differences arising are reported as other comprehensive income.
'Which version of the standard?' is only available to members of the Financial Reporting Faculty. Please note that to access electronic versions of IFRS through the links in these standard trackers you need to have first logged into eIFRS.
Full access to details of all the amendments is only available to Financial Reporting Faculty members. Find out how to join the faculty.
Effective for annual periods beginning on or after 1 January 2018. Earlier application is permitted.
IFRS 9 amends IAS 21 to replace certain references to IAS 39 with references to IFRS 9.
This page was last updated 23 April 2018