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Do we translate impairment at average rate or closing rate ?
Bcz the bpp kit is ambiguous in this regardthanks
Hi, the way I do it is to translate EVERYTHING at closing rate. At least that way I am consistent!
IAS 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.
But 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 🙂
@ 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?
In 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
So in such a case where post acq ret earnings are for 4 diff yrs.what rate shud be used for translation?
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