Foreign currency transactions and exchange differences
The Company’s consolidated financial statements are presented in Mexican peso, which is the reporting and functional currency of the parent company. For each subsidiary, the Company determines the functional currency and items included in the financial statements of each entity are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”).
The financial statements of foreign subsidiaries prepared under IFRS and denominated in their respective local currencies, are translated into the functional currency as follows:
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Transactions in foreign currencies are translated into the respective functional currencies at the exchange rates at the dates of the transactions. |
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All monetary assets and liabilities were translated at the exchange rate at the consolidated statement of financial position date. |
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All non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions. |
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Equity accounts are translated at the prevailing exchange rate at the time the capital contributions were made and the profits were generated. |
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Revenues, costs and expenses are translated at the average exchange rate during the applicable period. |
Any differences resulting from the currency translation are recognized in the consolidated statements of operations.
For the year ended December 31, 2017 and 2016 the exchange rates of local currencies translated to functional currencies are as follows:
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Exchange rates of local currencies |
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Exchange rates of local currencies |
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Country |
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Local |
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Functional |
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Average exchange |
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Exchange rate |
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Average exchange |
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Exchange rate |
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Costa Rica |
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Colon |
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U.S. dollar |
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₵. |
572.2000 |
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₵. |
572.5600 |
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₵. |
564.3332 |
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₵. |
561.1000 |
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Guatemala |
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Quetzal |
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U.S. dollar |
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Q. |
7.3509 |
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Q. |
7.3448 |
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Q. |
7.4931 |
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Q. |
7.5221 |
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The exchange rates used to translate the above amounts to Mexican pesos at December 31, 2017 and 2016 were Ps.19.7354 and Ps.20.6640, respectively, per U.S. dollar.
Foreign currency differences arising on translation into the presentation currency are recognized in OCI. Exchange differences on translation of foreign entities for the year ended December 31, 2017 and 2016 were Ps.7,178 and Ps.4,756, respectively. For the year ended December 31, 2015 exchange differences on translation of foreign entities were immaterial