UK IFRS Treatment query

[Fumita]

Hi,

I'm trying to figure out the correct IFRS treatment on a transaction but am a bit stumped on where to look to find out,

It's to do with the correct treatment for a transaction where there has been a transaction invoiced in one currency and settled in another at a commercially agreed rate of exchange.

Do you

A.) account for all aspects at the agreed rate regardless of the prevalent rate at the time

B.) take the variance between the prevalent rate and the commercially agreed rate and offset it against the declared revenue balance

C.) take the variance between the prevalent rate and the commercially agreed rate and offset it against realised forex gains/losses for the period.

Any views gratefully appreciated etc etc and if you could refer me to the IFRS specifically which deals with it I'll probably fall off my chair in gratitude,

Cheers!

 

[bklynboy]

Have you looked at IAS 21 which deals with foreign currency transactions? Short answer is
the difference between the converted amount to the invoiced amount is recognized as a gain or loss in the P&L.

Look here:

IAS 21 — The Effects of Changes in Foreign Exchange Rates

 

[Fidget]

Or it could be IAS 39. The "commercially agreed rate of exchange" suggests to me that it is a forward contract, which would be outside the scope of IAS 21 as agreeing an exchange rate in advance of the actual transaction is basically hedging, so would fall under IAS 39.