Difference of exchange
Now we are part of an International Company : so we have to report monthly figures of our 35 units , our 35 units are in different country so different currency ,
We are Consolidating all the units in The Holding and we report one figure to the Worldwide company , every month they send us the rate that we should use.
MY QUESTION IS : AS PER MY KNOWLEDE FIXED ASSETS SHOULD HAVE A HISTORICAL RATE AND WE SHOULD NOT DO A MONTHLY EVALUATION FOR THAT , BUT THEY ARE ASKING US TO DO SO .
CAN ANY ONE ADVISE HOW WE DEAL WITH FIXED ASSETS IF THERE IS MONTHLY EVALUATION????
Hi Tony
Historical cost is used when we have acquired fixed asset in foreign currency (21.23(b)). But while consolidating and presenting financial statements in presentation currency, closing rate should be used. (21.39(a)).
I hope this will help.
Dear Tony
For Consolidation purpose, IAS21 uses closing rate method. Then you should used closing rate for all assets and liabilities to translation.
Fixed assets used historical rate when you used for foreign currency transactions.
Don’t be confused about foreign currency transactions VS Foreign currency translation.
Consolidation process used Foreign currency translation from functional currency into a different presentation currency.
Best Regards;
Wichet
PS. Please see Vikas’ opinion, I strongly agreed with him.
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