Saturday, December 1, 2012

Inventories are non-monetary product - No forex

We received inquiries from our reader no matter if inventories ought to be translated/ revalued determined by year end rate.

IAS 21 “The Effects of Alterations in Foreign Exchange Rates” states that non-monetary product that happen to be measured with regards to historical cost within a foreign currency shall be translated working with the exchange rate in the date with the transaction. Note: inventories are non-monetary things.
Inventories are non-monetary product

Inventories are non-monetary product and need to be translated at their transaction rates if they can be denominated in foreign currencies. On the other hand, there could be situations exactly where the client could have revalued the inventory wrongly by translating the inventory determined by year-end closing rate or the typical for your year.

The auditor ought to go over this condition with corporate administration, and request management to quantify the error.

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