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How to reduce forex cost on historic loans

how to reduce translation costs in accounts

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Hi,

I have a head office which produce accounts in USD and has historic loans to our GBP and EUR subsidiaries.  The revaluation of these loans leads to an forex cost each quarter. Apart from writing off the loans, is there an alternative method/accounting treatment that can eliminate this cost each quarter?  Is there a possibility of posting any of the cost /revenue to equity in future.  We are using IFRS.

 

Thanks in advance, 

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By David Ex
27th May 2021 16:08

douglastubbs wrote:

The revaluation of these loans leads to an forex cost each quarter..

Surely it’s cost or profit depending on exchange rate movements? How can it be a cost every quarter?

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Replying to David Ex:
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By douglastubbs
27th May 2021 16:39

should have added that there is also a gain when it goes in the right direction.
Thanks

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By johnt27
27th May 2021 17:16

If you're reporting under IFRS you could apply hedge accounting if it's applicable to the circumstances.

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By johngroganjga
27th May 2021 18:27

Why do you want to eliminate the need to make correct entries?

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Replying to johngroganjga:
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By douglastubbs
03rd Jun 2021 09:37

No, I want to check when the intercompany mounts are eliminated and the resulting forex difference can be recognised in the balance sheet completely rather than in the balance sheet and profit and loss accounts as it is at the moment.
Thanks

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Melchett
By thestudyman
03rd Jun 2021 18:56

IAS 21 (The Effects of Changes in Foreign Exchange Rates) should provide the relevant information on what balances need revaluation and the subsequent treatment:

https://www.iasplus.com/en/standards/ias/ias21

Is there anything in the guidance which you are unsure about?

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