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AS11 Effect of changes in foreign exchange rates
Accountancy
What is the reason for change in the method of applying the rates for Integral and Non integral Eg in the case of Integral operation; Monetary item(MI) - closing rate, Non monetary item(NMI) transaction rate(cost) in the case of Non-integral operation: MI and NMI- both are at closing rate
Answers (1)
It is because of the nature of operations. Integral operations are considered as part of the reporting enterprise itself, so asset etc. are taken at rates at which which they were purchased as if the had been purchased by reporting enterprise itself. Non-integral operations represent investment in an enterprise which is reflected at closing rate to indicate reporting enterpriseâ??s net investment in that operation.
