If a presentation currency different from the functional currency is chosen, assets and liabilities are translated at the closing rate and income and expenses at transaction-date (or average) rates; translation differences go to other comprehensive income.
Source: TMS 21
Related terms
Functional currencyThe currency of the primary economic environment in which the entity operates.Exchange differencesThe difference arising from translating foreign-currency items at exchange rates on different dates.Other comprehensive incomeItems of income and expense recognised directly in equity rather than in profit or loss.Accounting estimatesThe determination by management judgement of amounts that cannot be measured precisely, such as provisions, useful lives, expected credit losses and fair values.Accounting policiesThe specific principles, bases, conventions, rules and practices an entity applies in preparing its financial statements.Accrual basis of accountingThe principle of recording transactions as income, expenses, assets and liabilities in the period in which they occur, rather than when cash is received or paid.
Last updated: October 31, 2026 · This definition is for general information only.