Exchange differences on monetary items
How are the exchange differences on monetary items dealt with?
Exchange differences arise from:
- the settlement of monetary items at a subsequent date to initial recognition;
- remeasuring an entity’s monetary items at rates different from those at which they were initially recorded (either during the reporting period or at the previous reporting periods);
- Such exchange differences must be recognised as income or expenses in the period in which they arise; and
- If the transaction is settled in a different accounting period to that of the initial recognition of the transaction, the exchange difference to be recognised in each period is determined by the change in exchange rates during that period.