Monetary items at the closing rate

Learning objectives

• Translate foreign currency monetary items using the closing rate.L1, L2
• Calculate, from the case data, the translated amount or the exchange difference relating to the concept “Monetary items at closing rate (23(a))”.L1, L2

Normative references

• IAS 21 §23At the end of each subsequent reporting period: foreign currency monetary items at the closing rate; non-monetary items measured at historical cost at the exchange rate at the date of the transaction; non-monetary items measured at fair value at the exchange rate at the date when the fair value was measured.
• IAS 21 §34An entity that keeps its books and records in a currency other than its functional currency translates all amounts into its functional currency in accordance with paras. 20 to 26 when it prepares its financial statements, so as to produce the same amounts as if the items had been recorded initially in the functional currency (monetary items at the closing rate, non-monetary items measured at historical cost at the exchange rate of the original transaction).

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

3 questions

• A receivable denominated in a foreign currency remains measured at the rate of the transaction date until it is settled, without being translated at the closing date.L1
• Quenet, whose functional currency is the euro, holds at the closing date a receivable of {foreign_amount}. The closing rate is 0.96 euro per 1 dollar. Calculate the receivable in euros at the closing date.L1
• Sorel holds a receivable of {foreign_amount}, recorded at {carrying_amount} at the rate of 0.89 euro per 1 dollar. At the closing date the rate is 0.93 euro, i.e. {closing_amount}. Post the closing translation entry.L2