Spot rate of the transaction

Learning objectives

• Calculate the initial amount in the functional currency using the spot exchange rate at the date of the transaction.L1, L2
• Calculate, from the case data, the translated amount or the exchange difference relating to the concept “Spot rate at transaction date (21)”.L1, L2

Normative references

• IAS 21 §21Initial recognition of a foreign currency transaction: the spot exchange rate between the functional currency and the foreign currency at the date of the transaction is applied.

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

3 questions

• On 12 March, Lorien, whose functional currency is the euro, sells goods invoiced in dollars. Which rate does it use to record the sale?L1
• Maurin, whose functional currency is the euro, sells goods invoiced at {foreign_amount}. The spot rate at the date of the transaction is quoted as: 1 euro = 1.25 dollars. Calculate the amount to record in euros.L2
• Rivane, whose functional currency is the euro, receives a machine invoiced at {foreign_amount} by a British supplier. The spot rate at the date of the transaction is 1.15 euros per 1 pound, i.e. {functional_amount}. Post the initial recognition entry.L2