Document ID: chunk:federal_register_of_legislation:F2023L01377:body:0:p7
Version: federal_register_of_legislation:F2023L01377
Segment Type: other
Provision Reference: 
Character Range: 16509–19337

shall assume its purpose in obtaining the other currency is to realise or settle individual foreign currency transactions, assets or liabilities.
(b) when an entity uses a presentation currency other than its functional currency (see paragraphs 38–43), the entity shall assume its purpose in obtaining the other currency is to realise or settle its net assets or net liabilities.
(c) when an entity translates the results and financial position of a foreign operation into the presentation currency (see paragraphs 44–47), the entity shall assume its purpose in obtaining the other currency is to realise or settle its net investment in the foreign operation.
A8 An entity's net assets or net investment in a foreign operation might be realised by, for example:
(a) the distribution of a financial return to the entity's owners;
(b) the receipt of a financial return from the entity's foreign operation; or
(c) the recovery of the investment by the entity or the entity's owners, such as through disposal of the investment.
A9 An entity shall assess whether a currency is exchangeable into another currency separately for each purpose specified in paragraph A7. For example, an entity shall assess exchangeability for the purpose of reporting foreign currency transactions in its functional currency (see paragraph A7(a)) separately from exchangeability for the purpose of translating the results and financial position of a foreign operation (see paragraph A7(c)).

Ability to obtain only limited amounts of the other currency
A10 A currency is not exchangeable into another currency if, for a purpose specified in paragraph A7, an entity is able to obtain no more than an insignificant amount of the other currency. An entity shall assess the significance of the amount of the other currency it is able to obtain for a specified purpose by comparing that amount with the total amount of the other currency required for that purpose. For example, an entity with a functional currency of LC has liabilities denominated in currency FC. The entity assesses whether the total amount of FC it can obtain for the purpose of settling those liabilities is no more than an insignificant amount compared with the aggregated amount (the sum) of its liability balances denominated in FC.

Step II:  Estimating the spot exchange rate when a currency is not exchangeable (paragraph 19A)
A11 This Standard does not specify how an entity estimates the spot exchange rate to meet the objective in paragraph 19A. An entity can use an observable exchange rate without adjustment (see paragraphs A12–A16) or another estimation technique (see paragraph A17).

Using an observable exchange rate without adjustment
A12 In estimating the spot exchange rate as required by paragraph 19A, an entity may use an observable exchange rate without adjustment