IAS 21 refers to International Accounting Standard (Effects of change in Foreign Exchange rate). It explains how to account for foreign currency transactions and operations in financial statements, and also how to translate financial statements into a presentation currency. It was reissued in December 2003. There are 3 types of currency linked with the Foreign Exchange Rates: At each subsequent balance sheet date: Foreign currency monetary amounts should be reported using the closing rate  Non-monetary items carried at historical cost should be reported using the exchange rate at the date of the transaction Non-monetary items carried at fair value should be reported. At the rate that existed when the fair values were determined Exchange difference arises when monetary items are settled other than the rates where they are initially recognized and are reported as profit or loss during the period. ·         ...