I want to discuss upon the concept of accounting entries and presentation aspect in case of foreign currency revaluation and translation. Can you confirm or object (with Detailed explanation) if my below statements are correct. * FC Revaluation is done always prior to FC translation. * In case of FC Revaluation, one side of entry goes to Revaluation asset/liability account while the other one goes to FC Revaluation gain/loss account I.e. P/L account. * In case of FC translation, both side of entry goes to Translation asset/liability/equity accounts of Consolidated B/S. This is the main part of my query on which I want views.
Please share your knowledge and experience keeping not only Indian but IFRS and US accounting in consideration.
As far as I understand your question, the revaluation of currency means the adjustment of FC in accordance with the rates prevailing in the money market. If you translate the FC at the date of transaction or revaluing the FC at the reporting date of financial statement, the effect of change in FC will be treated in P&L account. e.g. if the value raise the DR effect will go the value of FC in Balance sheet and CR effect will go to income (gain of FC) this will be exactly equal to the net change in currency value. for further details please see IAS - 21 (Effect of changes in FC) Para 9 to 14,20,37 & 50.
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