ACCA FR · Chapter 11 · Question 3 of 5
Under IAS 21, which of the following is a NON-MONETARY item that is NOT retranslated at the closing rate when it is measured at historical cost?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) A prepayment made in a foreign currency for goods to be received next year
Explanation
Monetary items are units of currency held, and assets and liabilities to be received or paid in a fixed or determinable number of units of currency. They are retranslated at the closing rate. A prepayment for goods will be settled by receiving goods, not cash, so it is non-monetary and stays at the historical rate.