IASB proposes amendments to IAS 21 setting out accounting when there is lack of exchangeability

The IASB has published proposed amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates.

At present, IAS 21 does not set out the exchange rate to be used when there is lack of exchangeability between two currencies e.g. when a currency cannot be converted into a foreign currency. The proposed amendments seek to help entities identify when such a lack of exchangeability exists and to clarify the accounting to be applied in such cases.

The amendments propose that when there is lack of exchangeability between two currencies at a measurement date, an entity shall estimate the spot exchange rate at that date. The proposed amendments also specify the conditions that the estimated exchange rate needs to meet.  

The Exposure Draft of the proposed amendments may be accessed here. Comments of the Exposure Draft are requested by 1 September 2021.