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- This topic has 7 replies, 4 voices, and was last updated 10 years ago by MikeLittle.
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- November 26, 2013 at 2:45 pm #147918
Do we translate impairment at average rate or closing rate ?
Bcz the bpp kit is ambiguous in this regardthanks
November 26, 2013 at 3:40 pm #147927Hi, the way I do it is to translate EVERYTHING at closing rate. At least that way I am consistent!
November 26, 2013 at 6:03 pm #147950IAS 21.47 requires that income statement item be translated at rates ruling at the date of the transaction. Any diffs arising be recognised in OCI. Comply with the standard. Mind the definations given thereon, they guide you.
November 27, 2013 at 12:24 pm #148062But no examiner is going to give you 300 different rates of exchange for 300 business days! So average rate is acceptable as a close approximation. But thank you for your contribution 🙂
November 27, 2013 at 12:43 pm #148067@ Mike…June 2011 the translation of post acquisition retained earnings (80) is translated at 5.8(Average for the Year) and not at 5 which was the closing rate at 30th April 2011. Why is this the case?
November 28, 2013 at 4:18 pm #148320In whose material? If you tackle the translation in the way I do, it would be translated at closing rate. If there are (say) four years’ worth of post acq retained earnings, I can’t understand why they would all be translated at average rate when they have been earned in 4 different years
November 28, 2013 at 9:58 pm #148377So in such a case where post acq ret earnings are for 4 diff yrs.what rate shud be used for translation?
December 2, 2013 at 9:50 am #149006Closing rate – in that way, the exchange rate movements are automatically accounted for as each year goes by and the post-acquisition figures are retranslated each year
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