- This topic has 3 replies, 2 voices, and was last updated 9 years ago by
.
- Posts
Hi Sir,
What is the accounting treatment for FOREX differences arising from the importation of Fixed assets in both cases where it realised & unrealised?
Thanks
The foreign currency cost of the non-current asset is translated as at the date of acquisition
“At each subsequent balance sheet date: [IAS 21.23]
foreign currency monetary amounts should be reported using the closing rate
non-monetary items carried at historical cost should be reported using the exchange rate at the date of the transaction
non-monetary items carried at fair value should be reported at the rate that existed when the fair values were determined”
So, for the entire period that the entity owns the non-current asset, there is no forex difference – it’s translated at historic cost ….
…. unless the asset is held at fair value in which case the fair value changes at each year end
If a gain or loss on a non-monetary item is recognised in equity (for example, property, plant and equipment revalued under IAS 16), any foreign exchange gain or loss element is also recognised in equity.
I think that answers your question
An example will be if i imported a machine on credit of 1 month at $100 and the rate of Pound to dollar was £1= $1.4. However on the payment date the pound moves to £1= $1.3. Should i capitalize the loss i made on the payment date or it should be expensed
Thanks once again sir
- You must be logged in to reply to this topic.