IAS 21 The Effects of Changes in Foreign Exchange Rates replaced IAS 21 Accounting for the Effects of Changes in Foreign Exchange Rates (issued in July 1983). In December 2003 the Board issued a revised IAS 21 as part of its initial agenda of technical projects.

In August 2023 the Board issued Lack of Exchangeability (Amendments to IAS 21) to require an entity to apply a consistent approach to assessing whether a currency is exchangeable into another currency and, when it is not, to determining the …

Oct 3, 2024 · IAS 21 permits the use of simplifications in determining the foreign exchange rate, such as using an average rate, as long as exchange rates don’t fluctuate significantly (IAS 21.22). In practice, entities often use the average of monthly rates, as central banks publish these for most currencies.

IAS 21 The Effects of Changes in Foreign Exchange Rates provides guidance to determine the functional currency of an entity under International Financial Reporting Standards (IFRS).

IFRS AT A GLANCE IAS 21 The Effects of Changes in Foreign Exchange Rates Also refer: IFRIC 16 Hedges of a Net Investment in a Foreign Operation (for entities that apply IAS 39) , IFRIC 22 Foreign Currency Transactions and Advance Consideration Effective Date

IAS 21 states that foreign currency monetary amounts should be reported using the closing rate with gains or losses recognised in profit or loss in the period in which they arise, even when the rate is abnormally high or low.

IAS 21 specifies the exchange rate to use for transactions expressed in foreign currency and foreign operations, and how to report the efects of changes in the exchange rate in the financial statements of both individual companies and groups.

IAS 21 prescribes how an entity should: translate the entity’s financial statements into a presentation currency, if different from the entity’s functional currency. IAS 21 permits an entity to present its financial statements in any currency (or currencies).

IAS 21 requires the recognition of exchange differences in profit or loss or OCI—with no reference to equity—because exchange differences meet the definition of income or expenses.

IAS 21 The Effects of Changes in Foreign Exchange Rates ... This communication contains a general overview of the topic and is current as of June 15, 2021.