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Hi,
I have reviewed IAS 21 (specifically para 16) and other advice, but am still stuck on the difference between monetary and non-monetary items. The key criteria is 'a right to receive (or an obligation to deliver) a fixed or determinable number of units of currency' , which to me makes sense for PPE and Inventory (Non-monetary) but I do not see what the difference here is between a Trade receivable/payable (Monetary) and a Prepayment (Non-monetary in most cases)?

Specially I am interested in how to revalue an OTC FX Forward, to my mind it would be monetary, but I am told it is non-monetary and therefore the FX rates floats with the Fair Value each day.

Thanks.

FX forward contracts are measured at fair value every day, and such fair value is usually based on the latest forward rate that obviously depends on the latest spot rate. So, a FX forward is conceptually translated at the latest spot rate no matter whether it is monetary or non-monetary. Personally, I believe a FX forward is a monetary item, though.

Prepayments are non-monetary and non-financial because they are not settled in cash but are settled by receiving goods or services.

Edpayasugo wrote: ↑26 Mar 2021, 16:39 Specially I am interested in how to revalue an OTC FX Forward, to my mind it would be monetary, but I am told it is non-monetary

Do you know the line of thought behind the statement above? FX forward seems like a perfect example of a monetary item as there is a determinable number of currency units to be paid/received under FX forward contract

besides, as pub_acco wrote, this distinction has no practical meaning for items measured at fair value. For example, shares are non-monetary assets, but if they are measured at fair value, you will effectively re-translate them at each reporting date to reflect fair value changes

Financial derivative contracts are definitely monetary items. You can determine their fair value, which is the number of units of currency that you have the right to receive or the obligation to deliver.

Given that derivative are carried at FVTPL, the FX component should already be factored in the fair value.

DJP, IMO the fact that you can determine fair value of an item is irrelevant for distinguishing between monetary and non-monetary items, hm?

It's not only fact that you can determine fair value. Is the combination of you being able to determine the fair value and having the right or the obligation to pay units of currency in the amount that you have determined (i.e. fair value)

Thank you for the responses, so are we saying that the FX rate to use is determined by IFRS 9, rather than IAS 21? Could someone point me to the relevant paragraph that explains this question please (I was looking at IAS 21 P23 c)?

Thanks.

FVTPL instruments including arbitrary monetary and non-monetary instruments need to be measured at every reporting date, so if one is monetary it has to be translated in accordance with IAS 21.23(a), which uses the spot rate at the reporting date, and if another is non-monetary it has to be translated in accordance with IAS 21.23(c), which also uses the spot rate at the reporting date.

pub_acco wrote: ↑29 Mar 2021, 13:08 FVTPL instruments including arbitrary monetary and non-monetary instruments need to be measured at every reporting date, so if one is monetary it has to be translated in accordance with IAS 21.23(a), which uses the spot rate at the reporting date, and if another is non-monetary it has to be translated in accordance with IAS 21.23(c), which also uses the spot rate at the reporting date.

Which is probably where my confusion arose, as here monetary/non-monetary and FV/non-FV don't matter as the treatment is the same.

Appreciate your help, thanks.