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ESMA comments on DI/2015/2

  • ESMA (European Securities and Markets Authority) (dark gray) Image

18 Jan 2016

The European Securities and Markets Authority (ESMA) has issued its comment letter on the IFRS Interpretations Committee exposure draft DI/2015/2 'Foreign Currency Transactions and Advance Consideration'.

The IFRS Interpretations Committee observed some diversity in practice regarding the exchange rate used when reporting transactions that are denominated in a foreign currency in accordance with IAS 21 The Effects of Changes in Foreign Exchange Rates in circumstances in which consideration is received or paid in advance of the recognition of the related asset, expense or income. As a consequence, the Interpretations Committee decided to develop an interpretation.

The ESMA “welcomes and supports” the guidance proposed in the Draft Interpretation.  However it recommends that the IFRS IC clarifies “how the proposed Interpretation would apply to situations in which there is a significant financing component due to a consideration being received before the transfer of goods or services”.

The full comment letter is available on the ESMA website. 

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