UK What Exchange rate should I use for a foreign asset that was recently revalued

[Mercedes]

I recently had a fixed asset investment revalued and want to include it in last year's Financial Statements. The foreign investment is in Euros, which needs to be converted to GBP, but I'm not sure what exchange rate to use in order to include it in the December 2014 Financial Statements as the revaluation of the asset was done in August 2015.

Should I be using the exchange rate at the date of revaluation, which is August 2015 or the December 2014 year end exchange rate? The exchange rate movement has been so huge over the last 8 months that it results to over £100k difference in value, depending on what exchange rate is used.

Can anyone help?
Thanks

 

[Fidget]

You use the exchange rate on the date of revaluation. But this is an after reporting period event and there's three scenarios:

1. Adjusting Event
2. Non adjusting event (ie disclosure by note to the accounts only)
3. Record in the current period accounts.

For year ending 31/12/2014, you'll be looking to FRS 21 (or FRS 102 if already adopted at that date) in UK GAAP, or IAS 10 if using IFRS. Either way, it doesn't matter as they all say the same thing.

Given that the revaluation took place some eight months after the end of the period you want to include it in, you're highly likely to be looking at scenario 3 - record in the current period accounts and do not touch Dec 2014 accounts by way of adjustment or disclosure note.

That said, if, for whatever reason, the Dec 2014 accounts are now materially misstated because this revaluation didn't take place at the time, then you need to get an independent valuation of what it would've been worth at 31/12/2014 because you can't just simply take the value as at Aug 2015 and apply the closing rate at 31/12/2014 to it.

In the event of obtaining an independent valuation, and Dec 2014 accounts are materially miss-stated by its omission, then it means restating the Dec 2014 financial statements rather than adjusting the originals as if it never happened. It's not difficult to do - it's just the original statements with an extra column on the end to show restated values.