SIC 7 Introduction of the Euro

Synopsis

SIC 7 addresses how the introduction of the Euro affects the application of IAS 21.

It concludes that IAS 21 should be strictly applied to the changeover, and in particular:

• Monetary assets and liabilities should be translated into the functional currency at the closing rate with any exchange differences recognised in profit or loss (other than where hedging rules apply)
• Cumulative exchange differences arising on the translation of financial statements of foreign operations should continue to be accumulated in equity and reclassified to profit or loss only on disposal of the net investment in the foreign operation
• Exchange differences resulting from the translation of liabilities denominated in participating currencies should not be included in the carrying amount of related assets.  

• Read the unaccompanied version of SIC 7

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Which version of the interpretation?

Financial Reporting Faculty members who joined the faculty prior to 1 November 2022 have premium access to the consolidated edition of IFRS and amendments through the IASB's IFRS Standards Navigator service. Please log into IFRS Standards Navigator to access electronic versions of the standards through these links.

Please be aware that as part of the changes to ICAEW faculty membership, this service will be withdrawn after 31 December 2022.

IFRSs referred to by SIC 7

• IAS 1 Presentation of Financial Statements
• IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
• IAS 10 Events After the Reporting Period
• IAS 21 The Effects of Changes in Foreign Exchange Rates
• IAS 27 Separate Financial Statements

This page was last updated 30 August 2022.