AS 11: The Effects of Changes in Foreign Exchange Rates

Key terminology and definitions defined in Accounting Standard (AS) 11 regarding foreign exchange accounting.

Average rate

The mean of the exchange rates in force during a period.

Closing rate

The exchange rate at the balance sheet date.

Exchange difference

The difference resulting from reporting the same number of units of a foreign currency in the reporting currency at different exchange rates.

Exchange rate

The ratio for exchange of two currencies.

Fair value

The amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction.

Foreign currency

A currency other than the reporting currency of an enterprise.

Foreign operation

A subsidiary, associate, joint venture or branch of the reporting enterprise, the activities of which are based or conducted in a country other than the country of the reporting enterprise.

Forward exchange contract

An agreement to exchange different currencies at a forward rate.

Forward rate

The specified exchange rate for exchange of two currencies at a specified future date.

Integral foreign operation

A foreign operation, the activities of which are an integral part of those of the reporting enterprise.

Monetary items

Money held and assets and liabilities to be received or paid in fixed or determinable amounts of money.

Net investment in a non-integral foreign operation

The reporting enterprise's share in the net assets of that operation.

Non-integral foreign operation

A foreign operation that is not an integral foreign operation.

Non-monetary items

Assets and liabilities other than monetary items.

Reporting currency

The currency used in presenting the financial statements.

Firm commitment

A binding agreement for the exchange of a specified quantity of resources at a specified price on a specified future date or dates.

Forecast transaction

An uncommitted but anticipated future transaction.

Long-term foreign currency monetary item

An asset or liability expressed in a foreign currency that has a term of 12 months or more at the date of origination of the asset or liability.