18.3) Translation of foreign currencies
Functional currency and reporting currency
Items included in the consolidated financial statements of each of the companies of the Company are measured in the currency of the primary economic environment in which the entity operates, i.e., its “functional currency” which is also the reporting currency. The consolidated financial statements are presented in (thousands of Mexican pesos), which is the Company's reporting currency.
18.3.1) Consolidation of subsidiaries with a functional currency different from the reporting currency
The results and financial position of Aerostar and Airplan (none of which handle a currency that corresponds to a hyperinflationary economy) expressed in a functional currency other than the reporting currency are converted to the reporting currency as follows.
| (i) | The assets and liabilities recognized in the consolidated statement of financial position are translated at the exchange rate on the balance sheet date. |
| (ii) | The stockholders’ equity in the consolidated statement of financial position is translated using the historical exchange rates. |
| (iii) | Income and expenses recognized in the consolidated statement of income are translated at the average exchange rate for each year (unless that average is not a reasonable approximation of the effect of translating the results derived from the exchange rates prevailing at transaction dates, in which case the Company uses the respective rates). |
| (iv) | The resulting exchange differences are recognized within OCI. |
Goodwill and fair value adjustments that arise on the date of acquisition of a foreign operation to measure them at fair value are recognized as assets and liabilities of the foreign entity and are converted at the closing exchange rate.
18.3.2) Transactions in foreign currency and results from exchange fluctuations
Operations carried out in foreign currency are recorded in the functional currency applying the exchange rates in effect at the transaction date or the exchange rate at the date of the valuation when the items are revalued.
Exchange differences arising from fluctuations in the exchange rates between the transactions and settlement dates, or the consolidated statement of financial position date, are recognized in the consolidated statements of comprehensive income.
