Disclosures when not exchangeable

Learning objectives

• Identify the disclosures required when the rate is estimated because a currency is not exchangeable.L3, L4

Normative references

• IAS 21 §57AWhen the entity estimates a spot exchange rate because a currency is not exchangeable (para. 19A), it discloses information that enables users to understand how that situation affects, or is expected to affect, its financial performance, financial position and cash flows: (a) the nature and financial effects of the currency not being exchangeable; (b) the spot exchange rates used; (c) the estimation process; (d) the risks to which the entity is exposed as a result.
• IAS 21 §57BCross-reference: paras. A18 to A20 explain how to apply para. 57A (level of detail needed, list of information, information specific to a foreign operation whose functional currency is not exchangeable).
• IAS 21Appendix A (an integral part of the Standard, added in 2023): application guidance on exchangeability — decision flowchart (A1); assessing exchangeability: normal administrative delay, ability (not intention) to obtain the currency, markets or exchange mechanisms creating enforceable rights, purpose of obtaining the currency, limited amounts (A2 to A10); estimating the spot exchange rate: observable exchange rate without adjustment, including a rate for another purpose or the first subsequent rate, or another estimation technique (A11 to A17); disclosures (A18 to A20).

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

2 questions

• In its notes, Brivon, which has estimated a spot rate because of non-exchangeability, discloses only the nature and financial effects of the non-exchangeability. Which required disclosure is missing?L3
• Brivon estimated a spot exchange rate because the currency of one of its foreign operations is not exchangeable. When drafting the note, its controller considers that the list of disclosures in para. 57A is self-sufficient and that no other IAS 21 requirement specifies how to apply it. What should he be told?L3