ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS REVIEWER
THEORIES
PRELIMS
MODULE 1
FOREIGN CURRENCY TRANSACTIONS
(NON-HEDGING) – IMPORT
Foreign Currency Transactions – are
transactions to be settled in a foreign
currency and financial statements of an
affiliate maintained in a foreign currency are
translated (converted) into pesos by
multiplying the numbers of units of the
foreign currency by a direct exchange rate.
Foreign Currency Translation – is the
process of expressing monetary amount
that are stated in terms in a foreign currency
into the currency of the reporting entity by
using an appropriate exchange rate.
Foreign Exchange Rate
A. Direct Quotation – one which the
exchange rate is quoted in terms of
how many units of the domestic
currency can be converted into one
unit of foreign currency.
B. Indirect Quotation – an exchange
rate often stated in terms of
converting one unit of domestic
currency into units of a foreign
currency.
Spot Rate – is the rate for the immediate
delivery of currencies exchanged.
Forward Rate – is the rate at which
currencies can be exchanged at some
future date. It is an exchange rate
established at the time a forward exchange
contract is negotiated. A forward exchange
contract is a contract to exchange at
specified rate currencies of different
countries on a specified future date.
Forward Rate in Forward Exchange
Contract
- before currencies are exchanged in a
forward exchange contract, the spot rate
may move above or below the contracted
forward exchange rate, but this has no
effect on the forward exchange rate
established when the forward exchange
contract was negotiated.
Bid Rate -also referred to as buying rate is
the maximum rate in the market which
buyers of stock are willing to pay in order to
purchase any stock or the other security
demanded by them.
Offer Rate – also referred to as selling
rate/minimum rate in the market at which
sellers are willing to sell any stock or the
other security which they are currently
holding.
Floating Rate
- relationship between major currencies is
determined by supply and demand factors.
- increase the risk to companies doing
business with a foreign company because
after a rate change occurs, all transactions
are conducted at the new rate until the next
change occurs.
Measured – transactions are normally
measured and recorded in terms of the
currency in which the reporting entity
prepares its financial statements. This
currency is usually the domestic currency of
the country in which the company is
domiciled and is also referred to as the
reporting currency.
Denominated – assets and liabilities are
denominated in a currency if their amounts
are fixed in terms of that currency.
Transactions
 Transactions between two Philippine
firm companies requiring payment of
a fixed number of pesos is both
measured and denominated in
pesos.
 Transaction between a Philippine
company and a foreign company,
two parties usually negotiate
whether the settlement be made:
a. In pesos (not a foreign
currency)
b. In the domestic currency of
the foreign company (a
foreign currency)
Transaction is to be settled by the payment
of a fixed amount of foreign currency, the
Philippine company measures the
receivable or payable in pesos, but the
transaction is denominated in specified
foreign currency.
Types of Foreign Exchange Rate
Exposure
A. Accounting Exposure – exposure
to changes in exchange rates as a
result of the entity:
- entering into foreign currency
transactions that result to contractual
rights and obligations, such as
receivables or payable denominated
in foreign currencies.
- having to translate the foreign
currency financial statements of
foreign operations from local
currency to the group’s reporting
currency for the purpose of
preparing consolidated financial
statements.
B. Economic Exposure (Operating
Exposure)
Functional Currency
 ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS REVIEWER
THEORIES
- is the currency of the “primary economic
environment in which the entity operates”
- should also be the currency in which a firm
receives most of its cash receipts and
expends cash outlays.
PAS 21 – The Effects of Changes in
Foreign Exchange Rate – emphasizes that
the functional currency of a firm should be
the currency that influences the sales prices
of goods and services.
Factors: Functional Currency
Primary Indicators
1. The currency that mainly influences
the sales prices of goods and
services.
2. The currency of the country where
competitive forces and regulations
determine the sales prices of goods
and services.
3. The currency that mainly influences
labor, materials, and other costs of
goods and services.
Supporting Evidence
1. The currency in which financing is
obtained.
2. The currency in which receipts from
operating activities are usually
retained.
Foreign Currency Transactions
A. A transaction with a foreign
company that is to be settled in
pesos is not a foreign currency
transaction.
B. A transaction with a foreign
company which is settled in foreign
currency is a foreign currency
transaction. This leads to the
Philippine company being exposed
to the risk of unfavorable changes in
the exchange rate that may occur
between dates the transaction
entered into and the date the
account is settled.
PAS 21 requires that a foreign currency
transaction be recorded (and measured) by
applying the foreign currency using the spot
exchange rate, referred to as the actual rate
existing of the transaction date.
Monetary Items
- units of currency held and assets and
liabilities to be received or paid in fixed or
determinable number of units of currency.
- items whose balances are fixed in terms of
pesos regardless of changes in the general
price level.
o Cash
o Accounts and notes receivables
o Prepaid interests
o Accounts and notes payables
o Loan payable
o Loan receivable
Non-Monetary Items
- referred to as accounts.
- the peso amounts of which they are
presented in the financial statements differ
from what they are actually realized or
represents.
o Inventories
o Prepaid expenses
o Land
o Buildings
o Equipment
o Capital stocks
Reporting at Subsequent Balance Sheet
Date
At each balance sheet dates:
1. Foreign currency monetary items
have to be adjusted (or remeasured)
for exchange rate changes using the
current/closing rate on balance
sheet date.
2. Non monetary items that are
measured in terms of historical cost
in a foreign currency are translated
using the exchange rate on the date
of the transaction.
3. Non monetary items that are
measured at fair value in a foreign
currency are translated using the
exchange rates on the date when
the fair value was determined.
Usually this date is the balance
sheet date, hence, the
current/closing rate is used.
Transaction Exposure
 Foreign currency monetary and non-
monetary items carried at fair value
have to be remeasured for changes
in foreign exchange rates. They are
said to be exposed to foreign
exchange risk.
 Transaction exposure is used to
refer to items in the financial
statements that are exposed to
foreign exchange rates as a result of
foreign currency transactions. As a
result of the exposure, an exchange
gain or loss takes place when the
foreign exchange rates change
between two dates.
 The resulting gains or losses
depends on the direction of the
foreign exchange rate movement
and whether item is an asset or a
liability.
Treatment of Transaction Gain/Loss
1. On balance sheet date. Foreign
currency monetary items are
translated at the current/closing rate
that is different from the spot rate at
which they were initially received
during the period or reported in
financial statements of the previous
period. In this case the exchange
 ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS REVIEWER
THEORIES
gain or loss is recognized as some or all of the price changes of another
unrealized gain or loss. underlying value of measure, but does not
2. On the date of settlement of foreign require the holder to own or deliver the
currency monetary items. The underlying value of measure. Thus, its value
exchange rate on the date of is derived from it.
settlement of a foreign currency
monetary item differs from the spot The underlying value of measure may be
rate at which it is recorded, thus one or more referenced:
resulting to a realized exchange gain • foreign currencies
or loss. • financial instruments, or
• commodities, or
 Foreign currency exchange • other assets, or
differences on non-monetary items • other specific items to which a rate such
are recognized in the same way as as interest rates (foreign currency exchange
the gain or loss on the item is rates as indicated earlier), an index of
recognized. Gain or loss on anon- prices, or another market indicator is
monetary item recognized in profit or applied. In most cases, derivatives differ
loss, any exchange in the gain or from traditional instruments (stocks and
loss is also recognized in profit or bonds, for example).
loss statement.
 Gain or Loss on a non-monetary The cash payments involved
item that is measured at fair value is are made at the end of the contract
recognized in OCI. rather than at its inception for the
most part, and the instruments have
consequently been treated in the
past in many cases as a type of off-
Balance sheet balance sheet agreement.
date
Current Direct Spot rate in Realization of The Four Foundations of PFRS 9
Exchange Rate effect at the transaction gain or 1. Derivatives are contracts that
balance sheet loss by comparing create rights and obligations that
n date carrying amount meet the definitions of assets and
of item against liabilities (thus these rights and
Transaction settlement amount obligations are reported in the
date
S balance sheet – not in an “off- Settleme
balance-sheet’ manner). date
2. Fair value is the only relevant
measure for reporting of derivatives
SUMMARY OF FOREX GAINS AND that are reported in the balance
LOSSES sheet at their fair values – whether
Balance Sheet or not they hedge an item.
Exposed Effect on Income 3. Only items that are assets and
Account Balance Statemen liabilities are reportable on the
Sheet balance sheet (thus losses on
Reported derivatives cannot be deferred and
Increase in reported as assets, likewise, gains
direct spot on derivatives cannot be deferred
rate and reported as liabilities).
Importation Payable Increase 4. Gains and losses on derivatives
Exportation Receivabl Decrease must be reported in earnings
e currently – except in certain
Decrease in specified situations in which the
direct sport gains and losses must be initially
rate reported in the other comprehensive
Importation Payable Decrease income.
Furthermore, in certain specified
Exportation Receivabl Increase
situations in which the gain or loss
e
on the hedging transaction must be
reported in net income (or other
MODULE 2
comprehensive income in some
FOREIGN CURRENCY TRANSACTION
cases).
(HEDGING)
Currently, the normal accounting for
the hedged item must be properly
Derivative Instruments – may be defined
identified so that the offsetting loss
as a financial instrument that, by its term at
or gain on the hedged item is also
inception or upon occurrence of a specified
reported currently in net income (or
event, provides the holder (or writer) with
the right (or obligation) to participate in
 ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS REVIEWER
THEORIES
other comprehensive income in
some cases).
The accounting treatment for both
types of these certain specified
situations comprises what is
collectively referred to as “hedge
accounting”.
Two broad categories
1. Forward-based derivatives - Under
these contracts, it has a “two-sided
exposure” wherein each party has a
favorable or unfavorable outcome
but not both simultaneously (e.g.,
both will not simultaneously have
favorable outcomes). Consequently,
the downside risk and the upside
potential on the hedged item are
counterbalanced.
o Forwards
o Futures
o Swaps
2. Option-based derivatives - Under
these contracts, it has a “one-sided
exposure”, in which only one
specified party can potentially have
a favorable outcome and it agrees to
pay a premium at inception for this
potentiality. The other party is paid
the premium, and it can potentially
have only one unfavorable outcome.
Consequently, only the downside
risk on the hedged item is
counterbalanced.
o Option contracts
o Interest rate caps
o Interest rate floors
Derivatives are recognized in the balance
sheet at their fair value.
Determination of that value is based on the
changes in the underlying value of measure
(foreign currency, financial instruments,
commodities, other assets, etc.) and on
assessment of the expected future cash
flows. The result is a payable position for
one of the involved parties and a receivable
position for the other.
A derivative being a financial instrument
normally includes notional amount.
The PFRS 9 definition of a derivative does
NOT INCLUDE a requirement that a
notional amount be indicated. PFRS
describes contracts with payment provisions
if an underlying move in a particular way as
an example of a contract without a notional
amount that is also a derivative.
The Notional Amount
- is the total face amount of the asset or
liability that underlies the derivative contract.
The notional amount can be misleading
because the value of a derivative is a
function of changes in prices or interest
rates and is normally equal to just a small
fraction of the notional amount of the
underlying asset.
- may be expressed in the number of
currency units, shares, bushels, pounds or
other units specified in the financial
instrument.
Hedging - is making an investment or
acquiring some derivative or non-derivative
instruments in order to offset potential
losses (or gains) that may be incurred on
some items as a result of particular risk.
What is the hedge?
• Hedged risk is a foreign currency
risk [i.e., the exposed, US dollar ($)]
• Hedged item is a receivable in
foreign currency exposed asset
• Hedging instrument is a foreign
currency forward contract to sell US
dollars for a fixed (forward) rate at a
fixed date
Hedge Accounting
- Hedge accounting affects the timing of
recognition of hedging gains and losses. By
applying hedge accounting, entities can
better match the gains or losses of the
hedging instrument with gains or losses of
their corresponding hedged items (hedging
instrument versus hedged item).
- The objective of hedge accounting is to
represent, in the financial statements, the
effect of risk management activities that use
financial instruments to manage exposures
arising from particular risks that could affect
profit or loss (P&L) or other comprehensive
income (OCI).
- If an entity chooses not to apply hedge
accounting, hedging instruments will need
to be classified and measured like any other
financial instruments as required by PFRS
9.
- Gains and losses on the hedging
instruments may not be recognized in P&L
or OCI in the same accounting period as the
gains and losses on their corresponding
hedged items
Hedge accounting is thus based on the
fundamental “matching” concept, and helps
to reduce the volatility in the income
statement caused by the accounting
mismatch between the hedging instrument
and hedged item and were accounted for
separately under PFRS.
Therefore, hedge accounting means
designating one or more hedging
instruments, so that their change in fair
value offsets or the change in cash flows of
a hedged item.
• Without hedge accounting, any gain
or loss resulting from the change in
fair value of foreign currency forward
 ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS REVIEWER
THEORIES
contract would be recognized
directly to profit or loss.
• With hedge accounting, this hedge
would be accounted for as a cash
flow hedge (to be discussed on the
later part). It means that you would
recognize full or a part of gain or
loss from foreign currency forward
directly to equity (other
comprehensive income).
The impact of the same foreign currency
forward contract on profit or loss statement
with hedge accounting can be significantly
lower than without it.
Why Hedge Accounting?
First of all, hedge accounting is NOT
mandatory. It is optional, entities may elect
not to follow it and recognize all gains or
losses from hedging instruments to profit or
loss.
However, when applying hedge accounting,
the readers of the financial statements,
may:
• That has knowledge that the
company faces certain risks.
• That the entity may have certain risk
management strategies in order to
mitigate those risks.
• How effective these strategies are.
In fact, with hedge accounting, the
company’s profit and loss statement is less
volatile, because basically matching these
gains and losses with gains / losses on the
hedged item.
Hedging Instruments
- “a designated derivative or (for a hedge of
the risk of changes in foreign currency
exchange rates only) a designated non-
derivative financial asset or non-derivative
financial liability whose fair value or cash
flows are expected to offset changes in the
fair value or cash flows of a designated
hedged item”.
An instrument must meet eight essential
criteria for it to be classified as a hedging
instrument:
1. It must be designated as such. This
means that management must
document the details of the hedging
instrument and the item it is hedging,
at the inception of the hedge.
2. It must be a derivative unless
criterion No. 3 is met.,
3. It is hedging foreign
currency exchange risk, in which
case it can be a non-derivative.
4. It must be expected to offset
changes in the fair value or cash
flows of the hedged item.
5. It must be with a party external to
the reporting entity — external to the
consolidated group or individual
entity being reported. There is one
exception to this rule in respect of
intra-group monetary items when
certain conditions are met.
6. It cannot be split into component
parts, except for separating the time
value and intrinsic value in an option
contract, and the interest element
and spot price in a forward contract.
7. A proportion of the entire hedging
instrument, such as 50% of the
notional amount, may be designated
as the hedging instrument. However,
a hedging relationship may not be
designated for only a portion of the
time period during which the hedging
instrument remains outstanding.
8. A single hedging instrument may be
designated as a hedge of more than
one type of risk.
Examples of hedging instruments:
o forward foreign currency exchange
o option contracts
o future contracts
o swaps (such as interest, cross
currency, etc.).
Hedged Item
- “an asset, liability, firm commitment, highly
probable forecast transaction or net
investment in a foreign operation that (a)
exposes the entity to risk of changes in fair
value or future cash flows and (b) is
designated as being hedged.”
Examples:
o Exposed asset or liability (not a
hedged accounting)
o Firm Commitment (hedged
accounting – fair value hedge or
cash flow hedge)
o Forecasted transaction (hedged
accounting – cash flow hedge)
o Speculation (not a hedged
accounting)
o Net investment in a foreign operation
(hedged accounting – cash flow
hedge)
Forward Contracts
- A forward contract is an agreement
between a buyer and a seller that requires
the delivery of some commodity at a
specified future date at a price agreed to
today (the exercise price). A typical example
of forward contracts is FOREIGN
CURRENCY FORWARD CONTRACTS.
A foreign currency forward contract is an
agreement to buy or sell a foreign currency
at:
1. a specified future date (usually within 12
months), and
2. a specified exchange rate. This rate is
called the forward rate.
At the inception of the contract, the forward
rate normally varies from the spot rate. The
 ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS REVIEWER
THEORIES
difference between the two rates is referred
to as a discount (premium) if the forward
rate is less than (greater than) the spot rate.
The use of forward contracts includes the
following:
1. Hedges
a. Forward contracts used as a hedge
of a foreign currency transaction.
These include importing and
exporting transactions denominated
in foreign currency. These hedges
do not qualify for hedge accounting
under PAS 39 because the foreign
exchange gains and losses are
already reported at market value on
the balance sheet.
b. Forward contracts used as a hedge
of an unrecognized firm commitment
(This type of hedge is now treated
as a fair value hedge rather than
cash flow hedges. However, PFRS 9
clarifies that a hedge of the foreign
currency risk of a firm commitment
can be treated as either a cash flow
hedge or fair value hedge). Hedge
accounting rules apply. Both the
change in the value of the hedge
and the value of the hedged item are
reported in earnings (before the
contract is reported in the books). An
example of an unrecognized firm
commitment would be when the firm
enters into a contract to purchase an
asset in two months for a fixed
amount of foreign currency.
c. Forward contract used as a
hedge of a foreign-currency-
denominated “forecasted”
transaction (a cash flow hedge).
Initially foreign exchange gains and
losses on the hedging instrument
are recognized in equity, while no
offsetting amount is reported on the
hedged item. Eventually, the
exchange gains and losses will be
reported in earnings in the period the
hedged items affect earnings (i.e., if
the item hedged is a forecasted
purchase of inventory, the gains and
losses on the hedge will be
reclassified into earnings when
inventory is sold, or when a
forecasted purchase of equipment,
the gains and losses on the hedge
will be reclassified into earnings as
the equipment is depreciated.) An
example of a forecasted
transaction is a situation where the
firm has planned sales receipts
(expected to occur in the near
future) and uses the forward contract
as a means to hedge the cash flow
risk.
d. Forward contracts as a hedge of
a net investment in foreign
operations. A foreign currency
transaction is considered a hedge
of a net investment in a foreign
entity if the forward contract is
designated as, and is effective as,
a hedge of the net investment. The
gain or loss on the hedging
instrument is reported in the equity
the same manner as the translation
adjustment.
2. Speculation - Forward contracts used to
speculate changes in foreign currency.
Forward rate should be used because a
firm speculating in foreign currency
changes is exposed to the risk of
movements in the forward rate. Foreign
exchange gains and losses are reported
currently in the income statement.
Future Contract
- A futures contract is the same thing with
forward contracts except that instead of
being negotiated between two parties, the
contract is a standard one that is
sponsored by an organized exchange. With
a futures contract, the exchange (third
party) handles the cash settlements
between the two parties to the contract.
Accordingly, with a futures contract, the two
parties to the agreement almost never
directly contact one another. This is not true
with forward contracts because they are
directly negotiated between the two parties.
Intrinsic Value
- Intrinsic value may be viewed as being
conceptually different from the time
value; it theoretically can be accounted
for separately from the time value. Carving
out the time value element and reporting its
gain or loss separately from the manner of
reporting the intrinsic value element’s gain
or loss is referred to as split accounting. -
---- Intrinsic value is the incremental
premium paid (difference between the spot
price and the exercise price - to be placed in
this favorable position). The entire premium
is called the time value (time value is
analogous to a prepaid insurance that
could be amortized over the life of the
option period).
MODULE 3
FOREIGN CURRENCY FINANCIAL
STATEMENT TRANSLATION
 ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS REVIEWER
THEORIES
Exchange Difference
- The difference resulting from translating a
given number of units of one currency into
another currency at different exchange
rates.
Foreign Operation
- A subsidiary, associate, joint venture, or
branch whose activities are based in a
country other than that of the reporting
enterprise.
Basic Steps for Translating Foreign
Currency Amounts into the Functional
Currency
- The primary economic environment in
which an entity operates is normally the one
in which it primarily generates and expends
cash. An entity considers the following
factors in determining its functional
currency:
a. the currency:
• that mainly influences sales prices for
goods and services (this will often be the
currency in which sales price for its goods
and services are denominated and settled);
and
• of the country whose competitive forces
and regulations mainly determine the sales
prices of the goods and services. b. the
currency that mainly influences labor,
materials, and other costs of providing
goods or services this will often be the
currency in which sales price for its goods
and services are denominated and settled)
Steps apply to a stand-alone entity, an
entity with foreign operations such as a
parent with foreign subsidiaries), or a
foreign operation such as a foreign
subsidiary or branch).
• The reporting entity determines its
functional currency
• The entity translates all foreign currency
items into its functional currency
• The entity reports the effects of such
translation in accordance with paragraphs
20-37 and 50 of PAS 21.
Functional Currency versus Presentation
Currency
Functional currency is the currency of the
primary economic environment in which an
entity operates. On the other hand,
presentation currency is the currency in
which the financial statements are
presented. In most cases, a stand-alone
entity’s presentation currency is also its
functional currency.
PAS 21 specifies two approaches to
translation and the approach to be used
depends on whether the functional currency
(is not the currency of a hyperinflationary
economy) of the foreign subsidiary is the
same as the presentation currency and
whether the books are kept in the functional
currency:
Method 1: Translation from the Functional
Currency into the Presentation Currency
(FCPC/Closing/Current Rate Method / Net
Investment Method / Translated Method).
This method is used on the following basis:
• Foreign operations operates independently
in economic and financial matters (or not
integral to the operations of the parent)
• Functional currency (is not the
presentation currency) should be the LCU
(local currency unit – the currency of the
country in which the subsidiary operates) or
a third country currency.
• The functional currency is not the currency
of a hyperinflationary economy, otherwise
apply PAS 29.
• The main features of the closing / current
rate method are summarized as follows:
➢ Assets and liabilities both monetary and
non-monetary are translated at current rate
on the date of the balance sheet
➢ Stockholder’s equity accounts are
translated using historical rates in effect at
the time equities were first recognized (date
of investment) in the foreign entity’s
accounting records, except:
 Beginning retained earnings is set
equal to the ending balance of last
year
 Dividends – historical rate on date of
declaration, otherwise date of
payment ➢ Revenue and expense
of the foreign operation are
translated at the dates of
transactions, i.e. actual or spot rates
(historical rates). For practical
reasons, the average rate is usually
used for items whose transactions
are numerous and occur evenly
throughout the year, for example,
sales, purchases and operating
expenses, but, if exchange rates
fluctuate significantly, the use of the
average for a period is inappropriate.
➢ All resulting difference (translation gains
or losses) shall be recognized in other
comprehensive income until the disposal of
the foreign operation, when they are
included in profit or loss.
Method 2: Translation into the Functional
Currency / Remeasurement of Foreign
Currency Financial Statements to the
Functional Currency (Temporal Method /
Remeasurement Method).
This method is used on the following basis:
• Foreign operation is integrated with
parent’s operation.
• Functional currency should be the parent’s
currency / presentation or reporting
currency.
 ACCOUNTING FOR GOVERNMENT AND NON-PROFIT ORGANIZATIONS REVIEWER
THEORIES
• The main features of the temporal or
remeasurement method are summarized as
follows:
➢ Monetary assets and liabilities (e.g. cash
and fixed deposits, receivables, payables
and most liabilities) shall be translated
(remeasured) using the closing rate
➢ Non-monetary items at historical cost or
carried at past exchange price (e.g. fixed
assets, investments at cost, prepaid items
except prepaid interest, inventories and
intangible assets) shall be translated
(remeasured) using the exchange rate at
the date of the transaction (historical rate)
➢ Non-monetary items at fair value or at
current of future exchange prices (e.g.,
trading securities, inventories carried at
replacement cost and revalued fixed assets)
shall be translated (remeasured) using the
exchange rate at the date of the revaluation
or fair value determination
➢ Stockholders’ equity accounts – are
translated (or remeasured) using the
historical rates in effect at the time equities
were first recognized (date of investment) in
the foreign entity’s accounting records,
except:
❖ Beginning retained earnings is set equal
to the ending balance of last year
❖ Dividends – historical rate on date of
declaration, otherwise date of payment
➢ Income statement items:
 Related to non-monetary items such
as cost of sales, depreciation of
plant assets, amortization of
intangible assets, amortization of
deferred charges or credits and
other allocation of non-monetary
items shall be translated (or
remeasured) using historical rate
(either at the date of purchase for
historical cost items or the date of
valuation for items carried at fair
value)
 Not related to non-monetary items
(or related to monetary items) such
as sales, purchases, expenses and
income items that result in
inflow/outflow of monetary items
shall be translated (remeasured)
using actual rate (historical rate);
however for practical reasons, an
average rate may be used.
➢ Resulting difference (remeasurement
gain or loss) should be reported as profit or
loss for the period; remeasurement gain or
loss arising from the revaluation of a non-
monetary item is taken to other
comprehensive income if the revaluation
gains or losses are taken to other
comprehensive income.