Under the relevant Accounting Standards (IAS 21) foreign currency monetary items are treated differently to foreign currency non-monetary items. The essential feature of a monetary item is the right to receive or an obligation to deliver a fixed or determinable amount of units of currency. A non-mo0netary items does not have this right.

Examples of monetary items:

  • Trade receivables and payables
  • Cash dividends recognized as a liability
  • Investments in debt securities
  • Deferred taxes
  • Pension and other employee benefits to be paid in cash
  • Provisions that are to be settled in cash

Examples of non-monetary items:

  • Prepaid amounts for goods or services
  • Deferred income
  • Investments in equity instruments
  • Inventories and other fixed assets
  • Goodwill, patents, trademarks and other intangible assets

It should be noted that investments in equity instruments are regarded as non-monetary items.

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