Recognition of forex exchange gains and losses - Net investment in foreign operations

[WBconsult89]

Hi

Foreign exchange gains and losses are generally recognised in profit or loss. Exceptions relate to monetary items that in substance form part of the reporting entity's net investment in a foreign operation. A monetary item receivable from or payable to a foreign operation may form part of the net investment in a foreign operation. To qualify, settlement of the monetary item should be neither planned nor likely to occur in the foreseeable future. To form part of the net investment in a foreign operation, the entity that has the monetary item receivable or payable may be the reporting entity or any subsidiary in the group.

If a group wants to change this to recognise the forex in OCI (Foreign translation reserve) and no longer in profit or loss, will this be a change in accounting policy and will we need to restate to the earliest comparatives?

Thanks

[JRSB]

Did you just realise it was wrong, or did you change the assessment of 'planned/likely to occur'?

[WBconsult89]

I need to get the facts on this, but if the assessment changed, this is only an application of the standard and not a change in accounting policy? If previously recognised in profit and loss this would be a change in accounting policy and you need to restate?

[Marek Muc]

This won't be a change in an accounting policy. It's either an error correction, or a reclassification accounted for prospectively if the reclassification results from changes in circumstances in the current period.

Further reading:
https://ifrscommunity.com/knowledge-bas ... -policies/
https://ifrscommunity.com/knowledge-base/errors/
https://ifrscommunity.com/knowledge-base/estimates/