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Chapter 11

Translating transactions

2.1 Initial transactions and settlements

Overseas transactions must be translated into the entity’s functional currency before
they are recorded.

Initial transaction

Translate at the rate
on the date of
transaction

If exchange rates have moved between the initial transaction and the
settlement date then a foreign exchange gain or loss will arise. This is
recorded in the statement of profit or loss.

Illustrations and further practice

Now try TYU 1 from Chapter 11

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