Non-monetary item
Examples can include inventory, property and prepayments for goods or services. Under IAS 21, a foreign-currency non-monetary item measured at historical cost is translated using the exchange rate at the transaction date; one measured at fair value uses the rate when fair value was measured. Apply the underlying measurement standard first. A balance is not monetary merely because it is expressed as an amount of money.
Worked example
A company pays $1,000 in advance for equipment when $1 equals €0.90. The right to receive equipment is non-monetary; subject to IFRIC 22 and the facts, it is not simply retranslated at each closing rate like a dollar payable.
Common mistake
Assuming all non-monetary items are measured at fair value or translating historical-cost inventory at the reporting-date rate.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | FR | Direct | September 2026–June 2027 |
| ACCA | SBR | Direct | September 2026–June 2027 |