Change in functionals currency

Joined
Mar 27, 2022
Messages
1
Reaction score
0
Country
Cyprus
Change in functional currency

We have a company which functional currency was the USD up to the year 2020. The Company's share capital is EUR 10.000, the equivalent of USD 14.500. As of 01/01/2021 the Company's functional currency will be the EUR. As per IAS 21 the effect of a change in the functional currency is accounted for prospectively. Therefore, an entity translates all items into the new functional currency using the exchange rate at the date of change. The resulting translated amounts for non-monetary items are treated as their historical cost.

Translating the USD 14.500 with the applicable rate on 01/01/2021, will be EUR 13.000. Which is not correct, since in reality the Company's share capital is EUR 10.000. What shall we do with the resulting EUR 3.000 difference? Does it go to the translation reserve? However as per IAS 21, after changing the functional currency, we should not have a translation reserve, as this is a different translation from translating the functional currency to a different presentation currency. Can someone please advise?
 

Ask a Question

Want to reply to this thread or ask your own question?

You'll need to choose a username for the site, which only take a couple of moments. After that, you can post your question and our members will help you out.

Ask a Question

Members online

No members online now.

Forum statistics

Threads
11,756
Messages
27,803
Members
21,756
Latest member
Kangwa10

Latest Threads

Top