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Is this contract effectively an embedded derivative?
in IAS 39 - Financial Instruments: Recognition and Measurement by

1 Answer

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A foreign currency loan will be dealt according to IAS 21, at the time foreign loan taken it will be recorded into balance sheet at spot rate exchange rate, and at balance sheet date, it will be revalued at exchange rate on the date of balance sheet. Any exchange gain or loss will be recorded into profit and loss account. However profit and loss item will be converted at average exchange rate in other word interest expense on foreign loan will be translated in presentation currency at average exchange rate.
by Level 2 Member (4.6k points)