CFM10540 - Currency transactions and accounting: changing to foreign currency accounting
Transitional cases: companies using currency accounting for the first time
This guidance describes the post-FA 2002 taxation of loan
relationships, derivative contracts and FOREX.
FA00/S105 sets out transitional rules for companies moving
into the FA 2000 regime for APs beginning on or after 1 January
2000.
Those transitional rules are equally relevant to companies
today that change from accounting in sterling to accounting in a
non-sterling currency, for example if the economic environment in
which they conduct the majority of their business changes.
Rules are needed to translate the sterling values used at the
end of the last period before the company adopts currency
accounting, into the non-sterling equivalents. These then become
the opening figures for the first set of accounts using currency
accounting.
The rules require the following amounts to be translated into
the currency of the accounts at the London closing rate for the
last day of the immediately preceding accounting period:
| FA00/S105 (2) | Management expenses, losses etc, brought forward in sterling, are translated and carried forward in the currency of the accounts. |
| FA00/S105 (3) | Capital allowance plant and machinery pool values brought forward are translated to form the opening values for the CA computation. * |
