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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

The International Accounting Standards Board (IASB) provides free access to the consolidated unaccompanied international accounting standards for the current year through its website. Free registration is required.

Which version of the interpretation?

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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 4 February 2022