SIC 7 – Introduction of the Euro

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Date of adoption: May 1998

Why this SIC was issued?

In January 1999, Economy and Monetary Union (EMU) was effected and as a result of which euro became a separate currency itself with fixed (Irrevocable) different exchange rates against currencies of all countries of EU.

The main reason of issuance of this how to apply IAS 21 on this changeover between EURO and Currencies of member countries.

Consensus:

i) The requirements of IAS 21 relating to:
a.Translation of transactions designated in foreign currencies
b.Translation of foreign operations

Summary of accounting treatment is as follows:

a) Monetary assets and liabilities designated in foreign currency arising as a result of transaction shall be translated at CLOSING Exchange rate and any exchange gain/(loss) shall be charged in P/L immediately

b) Cumulative exchange gain/(loss) on translation of FS foreign operations, recorded in OCI, Shall be included in equity. This amount will transferred to P/L from equity at the time of disposal of foreign operations.

Effective date:
June 1, 1998

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