Translation at the date of the change

Learning objectives

• Calculate the amounts in the new functional currency using the exchange rate at the date of the change (new historical cost).L3, L4

Normative references

• IAS 21 §37The effect of a change in functional currency is accounted for prospectively: all items are translated into the new functional currency using the exchange rate at the date of the change; the resulting translated amounts for non-monetary items are treated as their historical cost; exchange differences arising from the translation of a foreign operation previously recognised in other comprehensive income (paras. 32 and 39(c)) are not reclassified to profit or loss until the disposal of the operation.

Original summaries of the paragraphs (reference register), never a quotation of the standard.

1 question

• Tessier, whose functional currency was the dollar, adopts the euro as its functional currency at a date when the rate is 0.92 euro per 1 dollar. A non-monetary piece of equipment has a carrying amount of {foreign_amount}. Calculate in euros the amount that becomes its new historical cost.L3