SIC Interpretation 7
Introduction of the Euro
(SIC‑7) is set out in
paragraphs 3 and 4
. SIC‑7 is accompanied by a
Basis for Conclusions
. The scope and authority of Interpretations are set out in the
Preface to IFRS Accounting Standards
.
FOR THE BASIS FOR CONCLUSIONS, SEE PART C OF THIS EDITION
SIC Interpretation 7
Introduction of the Euro
References
Presentation and Disclosure in Financial Statements
Basis of Preparation of Financial Statements
Events after the Reporting Period
The Effects of Changes in Foreign Exchange Rates
(as revised in 2003)
Consolidated and Separate Financial Statements
(as amended in 2008)
Issue
1
From 1 January 1999, the effective start of Economic and Monetary Union (EMU), the euro will become a currency in its own right and the conversion rates between the euro and the participating national currencies will be irrevocably fixed, ie the risk of subsequent exchange differences related to these currencies is eliminated from this date on.
2
The issue is the application of
to the changeover from the national currencies of participating Member States of the European Union to the euro (‘the changeover’).
Consensus
3
The requirements of
regarding the translation of foreign currency transactions and financial statements of foreign operations should be strictly applied to the changeover. The same rationale applies to the fixing of exchange rates when countries join EMU at later stages.
[
Refer:
Basis for Conclusions paragraph 5
]
4
This means that, in particular:
(a)
foreign currency monetary assets and liabilities resulting from transactions shall continue to be translated into the functional currency at the closing rate. Any resultant exchange differences shall be recognised as income or expense immediately, except that an entity shall continue to apply its existing accounting policy for exchange gains and losses related to hedges of the currency risk of a forecast transaction;
[
Refer:
Basis for Conclusions paragraph 6
]
(b)
cumulative exchange differences relating to the translation of financial statements of foreign operations, recognised in other comprehensive income, shall be accumulated in equity and shall be reclassified from equity to profit or loss only on the disposal or partial disposal of the net investment in the foreign operation; and
[
Refer:
Basis for Conclusions paragraph 7
]
(c)
exchange differences resulting from the translation of liabilities denominated in participating currencies shall not be included in the carrying amount of related assets.
Date of consensus
October 1997
Effective date
This Interpretation becomes effective on 1 June 1998. Changes in accounting policies shall be accounted for according to the requirements of
.
(as revised in 2007) amended the terminology used throughout IFRSs. In addition it amended
paragraph 4
. An entity shall apply those amendments for annual periods beginning on or after 1 January 2009. If an entity applies
(revised 2007) for an earlier period, the amendments shall be applied for that earlier period.
1
(as amended in 2008) amended
paragraph 4(b)
. An entity shall apply that amendment for annual periods beginning on or after 1 July 2009. If an entity applies
(amended 2008) for an earlier period, the amendment shall be applied for that earlier period.
Footnotes
1
In April 2024 the IASB issued
Presentation and Disclosure in Financial Statements
and carried over these requirements in
Presentation of Financial Statements
to
.
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