What the standard covers

Learning objectives

• Identify the transactions and activities within the scope of the Standard (foreign currency transactions, foreign operations, translation).L1, L2

Normative references

• IAS 21 §3Scope: (a) transactions and balances in foreign currencies, except derivative transactions and balances within the scope of IFRS 9; (b) translation of the results and financial position of foreign operations included by consolidation or the equity method; (c) translation of an entity's results and financial position into a presentation currency. Para. 4 explains the exclusion of derivatives.
• IAS 21 §4The many foreign currency derivatives within the scope of IFRS 9 are excluded from the scope; those outside IFRS 9 (for example, some derivatives embedded in other contracts) remain within the scope, and the Standard also applies when an entity translates amounts relating to derivatives from its functional currency into its presentation currency. Hedge accounting is dealt with in para. 5.

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

2 questions

• Which of the following falls within the scope of IAS 21?L1
• Aldric, whose accounts are in euros, consolidates a subsidiary in Switzerland whose financial statements are in Swiss francs. Aldric asks which standard to use to bring this subsidiary's statements into its consolidated accounts. What is the consistent analysis?L2