HKAS 21 Revised June 2010July 2012 Hong Kong Accounting Standard 21 The Effects of Changes in Foreign Exchange Rates HKAS 21 © Copyright 2 COPYRIGHT © Copyright 2012 Hong Kong Institute of Certified Public Accountants This Hong Kong Financial Reporting Standard contains IFRS Foundation copyright material. Reproduction within Hong Kong in unaltered form (retaining this notice) is permitted for personal and non-commercial use subject to the inclusion of an acknowledgment of the source. Requests and inquiries concerning reproduction and rights for commercial purposes within Hong Kong should be addressed to the Director, Finance and Operation, Hong Kong Institute of Certified Public Accountants, 37/F., Wu Chung House, 213 Queen's Road East, Wanchai, Hong Kong. All rights in this material outside of
Hong Kong are reserved by IFRS Foundation. Reproduction of Hong Kong Financial Reporting Standards outside of Hong Kong in unaltered form (retaining this notice) is permitted for personal and non-commercial use only. Further information and requests for authorisation to reproduce for commercial purposes outside Hong Kong should be addressed to the IFRS Foundation at www.ifrs.org. Further details of the copyright notice form IFRS Foundation is available at http://app1.hkicpa.org.hk/ebook/copyright-notice.pdf HKAS 21 (June 2010July 2012) © Copyright 3 CONTENTS paragraphs INTRODUCTION IN1-IN17 HONG KONG ACCOUNTING STANDARD 21 THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES OBJECTIVE 1-2 SCOPE 3-7 DEFINITIONS 8-16 Elaboration on the definitions 9-16 Functional currency 9-14 Net investment in a foreign operation 15-15A Monetary items 16 SUMMARY OF THE APPROACH REQUIRED BY THIS STANDARD 17-19 REPORTING FOREIGN CURRENCY TRANSACTIONS IN THE FUNCTIONAL CURRENCY 20-37 Initial recognition 20-22 Reporting at the ends of subsequent reporting periods 23-26 Recognition of exchange differences 27-34 Change in functional currency 35-37 USE OF A PRESENTATION CURRENCY OTHER THAN THE FUNCTIONAL CURRENCY 38-49 Translation to the presentation currency 38-43 Translation of a foreign operation 44-47 Disposal or partial disposal of a foreign operation 48-49 TAX EFFECTS OF ALL EXCHANGE DIFFERENCES 50 DISCLOSURE 51-57 EFFECTIVE DATE AND TRANSITION 58-60BD WITHDRAWAL OF OTHER PRONOUNCEMENTS 61-62 APPENDICES: A Comparison with International Accounting Standards B Amendments to other pronouncements C Amendments resulting from other HKFRSs BASIS FOR CONCLUSIONS Hong Kong Accounting Standard 21 The Effects of Changes in Foreign Exchange Rates (HKAS 21) is set out in paragraphs 1-62 and Appendices B and C. All the paragraphs have equal authority. HKAS 21 should be read in the context of its objective and the Basis for Conclusions, the Preface to Hong Kong Financial Reporting Standards and the Conceptual Framework for the Preparation and Presentation of Financial StatementsFinancial Reporting. HKAS 8 Accounting Policies, Changes in Accounting Estimates and Errors provides a basis for selecting and applying accounting policies in the absence of explicit guidance. HKAS 21 (June 2010) © Copyright 4 Introduction IN1 Hong Kong Accounting Standard 21 The Effects of Changes in Foreign Exchange Rates (HKAS 21) should be applied for annual periods beginning on or after 1 January 2005. Earlier application is encouraged. Reasons for issuing HKAS 21 IN2 The objectives of the HKICPA in issuing HKAS 21 were to reduce or eliminate alternatives, redundancies and conflicts within the HKFRSs, to deal with some convergence issues and to make...
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