Monetary items are translated using the exchange rate at the balance sheet date.

Question

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Monetary items are assets or liabilities that are denominated in a currency, and their values are fixed in nominal terms. They are translated using the exchange rate at the balance sheet date because their values are not affected by changes in exchange rates. This ensures that the financial statements reflect the true financial position of the company at the balance sheet date. Non-monetary items, on the other hand, are translated using the exchange rate prevailing at the date they were acquired or incurred.

Monetary Items Are Translated Using the Exchange Rate at the Balance