SIC-11
Historical
Foreign Exchange–Capitalisation of Losses from Severe Currency Devaluations
Addressed whether exchange losses from severe currency devaluations could be capitalised into related assets. Withdrawn in 2003.
Historical Reference
SIC-11 was withdrawn in March 2003 when the IASB issued a revised IAS 21 The Effects of Changes in Foreign Exchange Rates, which eliminated the capitalisation option for exchange losses from severe currency devaluations.
This page is retained for historical and comparative reference. Entities should refer to the current standard that superseded this interpretation for authoritative guidance.
Current Standard
IAS 21 The Effects of Changes in Foreign Exchange Rates 1
What SIC-11 Addressed (Historical)
What SIC-11 addressed
SIC-11 addressed whether exchange losses arising from severe currency devaluations could be capitalised into the cost of related assets. It clarified whether such losses could be included in the carrying amount of an asset when they arose from a devaluation that was not expected to reverse in the near term.
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The Conclusion It Reached (Historical)
The conclusion it reached
SIC-11 concluded that exchange losses from a severe currency devaluation that could not be predicted and were not expected to reverse in the near term could be capitalised into the cost of related assets, provided that the losses were directly attributable to the acquisition of those assets. This treated severe devaluations differently from ordinary exchange fluctuations.
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Where This Guidance Lives Today
Where this guidance lives today
Superseded byIAS 21 The Effects of Changes in Foreign Exchange Rates
Why withdrawnThe 2003 revision eliminated the capitalisation option entirely
Current statusWithdrawn
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Glossary
Currency devaluation
A significant downward adjustment to a country's currency value relative to other currencies, distinct from normal exchange rate fluctuations.
Capitalisation
The accounting treatment of including a cost as part of the carrying amount of an asset rather than recognising it as an expense.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows
History & Development
Jan-1998
In January 1998 the Standing Interpretations Committee issued SIC-11 Foreign Exchange–Capitalisation of Losses from Severe Currency Devaluations.
Apr-2001
In April 2001 the International Accounting Standards Board adopted SIC-11.
Minor consequential amendment to SIC-11
Mar-2003
In March 2003 the Board issued a revised IAS 21 The Effects of Changes in Foreign Exchange Rates which superseded SIC-11.
Superseded by revised IAS 21