Page 113 - Finac1 Test 2 slides

THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

Example - Revaluation of assets

COMMENT

• Non-monetary items which are measured at fair value, should be
measured using the exchange rates that existed when the fair
values were determined (IAS 21.23(c))

• The total increase results from the movement in the exchange
rate and the revaluation to fair value. The total movement is
credited to the revaluation surplus (IAS 21.30).

• If land was classified as an investment property, the fair value
adjustment would have been recognised in profit or loss. As a

result any foreign exchange component should also be recognised
in profit or loss (IAS 21.30).

• Financial assets measured at fair value through OCI (manditory

classification) is treated as a monetary item (IFRS 9.B5.7.2A).

• Financial assets measured at fair value through OCI (elected

classification) is not a monetary item (IFRS 9.B5.7.3).

113