What is currency conversion capability

Currency conversion

In the individual financial statements of the group companies, all receivables and debts in foreign currencies are valued at the rate on the balance sheet date, regardless of whether they are hedged or not. Forward transactions, which - from an economic point of view - serve to hedge exchange rates, are recognized at their respective fair values. The resulting exchange differences are recognized in profit or loss or, if cash flow hedges exist, in other equity.

The annual financial statements of the consolidated companies prepared in a foreign currency are converted on the basis of the functional currency concept using the modified closing rate method. According to this, the balance sheets are converted from the functional currency to the reporting currency using the average rate on the balance sheet date and the income statements are converted using the average rates for the reporting period. Since the subsidiaries conduct their business independently from a financial, economic and organizational point of view, their functional currency is fundamentally identical to the respective national currency of the company. The currency difference resulting from the conversion of equity is recorded in the other equity items. Exchange differences resulting from different exchange rates in the income statement are also taken into account there. If group companies leave the scope of consolidation, the relevant currency conversion difference is released through profit or loss.

The exchange rates of the most important currencies used for currency conversion are as follows in relation to one euro:

 

 

ISO code

 

Closing rate

 

Average rate

 

 

 

 

31.12.2011

 

31.12.2010

 

2011

 

2010

 

 

 

 

 

 

 

 

 

 

 

U.S. dollar

 

USD

 

1,29

 

1,33

 

1,39

 

1,33

Japanese yen

 

JPY

 

100,30

 

108,46

 

110,99

 

116,36

Singapore dollar

 

SGD

 

1,68

 

1,71

 

1,75

 

1,81

Chinese renminbi

 

CNY

 

8,13

 

8,79

 

9,00

 

8,98