Average rate as an approximation

Learning objectives

• Assess whether an average rate can approximate the rate at the date of the transaction (rates that do not fluctuate significantly).L2, L3

Normative references

• IAS 21 §22Date of the transaction: the date on which the transaction first qualifies for recognition; an average rate for a period may be used as an approximation if exchange rates do not fluctuate significantly (inappropriate if they fluctuate significantly).

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

1 question

• Thorel records sales in dollars every day. During June, the dollar rate fluctuated significantly, with large swings from one week to the next. The controller proposes to use the June average rate for all the month's sales. What is the consistent position?L3