21. October 2015

Draft IFRIC Interpretation DI/2015/2 Foreign Currency Transaction and Advance Consideration

The IFRS Interpretations Committee (IFRS IC) has today published for public comment the Draft InterpretationDI/2015/2 Foreign Currency Transaction and Advance Consideration.

IAS 21 sets out requirements about which exchange rate to use when recording a foreign currency transaction on initial recognition in an entity’s functional currency. According to IAS 21.21 is that the spot exchange rate at the date of the transaction. In this respect, the IFRS IC received a question about which exchange rate to use in circumstances in which a customer paid for goods or services by making a non-refundable payment in advance. The IFRS IC developed the draft Interpretation to address this question. As proposed in the draft, the date of the transaction is the earlier of:

  1. the date of initial recognition of the non-monetary prepayment asset or the non-monetary deferred income liability; and
  2. the date that the asset, expense or income (or part of it) is recognised in the financial statements.

The IASB requests comments on the draft by 19 January 2016 on www.ifrs.org. (IASB press release)