The temporal method is used to translate integrated operations and the current-rate method is used to translate self-sustaining operations.
The parent has the same exposure to foreign currency fluctuations as if it had directly undertaken the transactions.
An entity is required to determine a functional currency (for each of its operations if necessary) based on the primary economic environment in which it operates and generally records foreign currency transactions using the spot conversion rate to that functional currency on the date of the transaction.
IAS 21 was reissued in December 2003 and applies to annual periods beginning on or after 1 January 2005.
In today’s world, most groups spread their activities abroad and logically different members of the group operate in different currencies.
Is the consolidation process of combining the financial statements of two (or more) companies different when they operate in different currencies? If you want to combine the financial statements prepared in different currencies, you will still follow the same consolidation procedures.