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Foreign currency transactions Foreign
currency transactions are recorded in the reporting currency by applying to the foreign currency amount
the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Exchange rate differences arising on the settlement of monetary items at rates different from those
at which they were initially recorded during the periods are recognised in the income statement in the
period in which they arise. Foreign entities Foreign
consolidated subsidiaries are regarded as foreign entities since they are financially, economically
and organisationally autonomous. Their reporting currencies are their respective local currencies. Financial
statements of foreign consolidated subsidiaries are translated at year-end exchange rates with respect
to the balance sheet. Expense and revenue items are translated using the average exchange rates for
the year. All resulting translation differences are included in a currency translation reserve in equity. Any
goodwill arising on the acquisition of a foreign entity is recorded using the exchange rate at the effective
date of the transaction. Exchange differences arising on a monetary item that, in substance, forms part
of the Group’s net investment in a foreign entity are classified as equity in the consolidated financial
statements until disposal of the net investment.
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