CERTYNEX IFRS ACADEMY

Tarvin paid a foreign supplier an advance of 20,000 dollars for the delivery of a machine. Its accountant writes: "This advance is a monetary item, so it will be translated at the closing rate." What is the error?

An advance is a non-monetary item whatever the nature of what is received in return, including where it is received in cash.

An advance giving a right to an asset, and not to fixed or determinable units of currency, is not a monetary item.

A monetary item is translated at the historical rate of the transaction date, which avoids recognising a difference.

An advance in dollars is not a monetary item because the dollar is a foreign currency.