BCZ46 In response to comments from field test participants, paragraph 54 of IAS 36 includes guidance on calculating the value in use of an asset that generates future cash flows in a foreign currency. IAS 36 indicates that value in use in a foreign currency is translated into the reporting currency [In IAS 21 The Effects of Changes in Foreign Exchange Rates, as revised by the IASB in 2003, the term ‘reporting currency’ was replaced by ‘functional currency’.] using the spot exchange rate at the balance sheet date.
BCZ47 If a currency is freely convertible and traded in an active market, the spot rate reflects the market’s best estimate of future events that will affect that currency. Therefore, the only available unbiased estimate of a future exchange rate is the current spot rate, adjusted by the difference in expected future rates of general inflation in the two countries to which the currencies belong.
BCZ48 A value in use calculation already deals with the effect of genera
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