Translation issue - presentation currency vs functional currency

[Ruimonte83]

Please help understand the following example in Consolidation:

Company A (mother) functional currency is USD, but it has portfolio of short term investments both in USD, GBP and EUR
Due to the group transacting mostly in Euro, the group presentation currency is chosen as being EUR.

On company A the variances between USD and EUR are being revaluated and impacting P&L of A monthly and that's ok
When flowing to Consolidation which has the presentation currency EUR shall the above fx PL impact maintain on Consolidated accounts or being adjusted against Translation Reserve in Equity?

Today I am maintaining the FX revaluation from EUR to USD in P&L and then translation differences USD to EUR in Equity

IAS 21 not very clear on that.

[DJP]

Hi,

The effect from changes in the EUR/USD rate for the revaluation of the EUR amounts stay in the consolidated P&L.

[Marek Muc]

Since EUR is a foreign currency, the gains and losses from foreign exchange on EUR-denominated transactions stay in P/L. Also, curious to know why you believe the USD should still be treated as the functional currency.

[Ruimonte83]

Hi Marek

The functional currency in company A is stil USD because nevertheless it has assets in EUR and GBP as also, theire main assets and Equity are in USD.
On the other end the presentation of consolidated group accounts are in EUR because besides the holding, the group operates mostly in Euros.
Makes sense?

Thanks

[Marek Muc]

What is the approximate structure of consolidated revenue per currency?

[Ruimonte83]

For revenue about:
- 20% ISK (Iceland)
- 30% EUR (multiple countries in Europe)
- 30% GBP
- 15% USD
- 5% other

But this is growing company so most of expenses in EUR and GBP

[Marek Muc]

You might want to check IAS 21.9-14 and see if it still makes sense to use USD as the functional currency.

[Ruimonte83]

Thanks

For the standalone accounts of the holding and based that 60% of the assets and the shares are in USD I cant see how could i defend a diferent one for standalone... Standalone holding doesn't have revenue

[Marek Muc]

https://www.ifrs.org/content/dam/ifrs/m ... holdco.pdf

https://www.ifrs.org/content/dam/ifrs/s ... h-2010.pdf