Closing Exchange Rate
Accounting glossary · Understand, connect, apply
The closing exchange rate is the spot exchange rate at the end of the reporting period.
Example
An entity has a foreign-currency trade payable at year-end. Under IAS 21 it generally translates this monetary item into its functional currency using the closing rate.
Remember the difference
The closing rate and the transaction-date rate answer different measurement questions. The applicable rate depends on the item and the accounting context.
Browse the accounting glossary · Read the IFRS Foundation reference
Prepared with AI assistance. Examples are fictional and simplified for learning.
Examples are simplified for learning. Where a term depends on US law, IFRS, US GAAP or a historical rule, check the context explained above and the requirements relevant to your course.
Study references: OpenStax financial accounting and managerial accounting. For reporting requirements, consult the applicable IFRS Standards or FASB guidance. US tax terms should be checked against the relevant tax-year IRS instructions.
← Return to the accounting glossary