What is Presentation Currency?
Presentation currency is the currency in which financial statements are presented. Under IAS 21, an entity may present its financial statements in any currency, but if the presentation currency differs from the functional currency, all amounts must be translated using prescribed rules.
How It Works
- Identify the functional currency first.
- Choose a presentation currency, often the same as functional.
- Translate assets and liabilities at closing rate.
- Translate income and expenses at transaction-date or average rates, posting differences to OCI.
Saudi Context
Saudi listed companies are required to present financial statements in Saudi riyal on Tadawul, even if a subsidiary’s functional currency is USD, EUR or another regional currency.
Example
A Saudi parent with a USD-functional subsidiary translates the subsidiary’s results into SAR for consolidation, taking the translation difference through OCI.