Part 2Calculation of liability in respect of profits

Chapter 4Currency

Translating amounts into other currencies

11Sterling equivalents: basic rule

1

Subsection (2) applies if, for the purposes of calculating the profits or losses of a company arising in an accounting period, section 7(2), 8(2) or 9(2) requires a profit or loss to be translated into its sterling equivalent.

2

The translation must be made by reference to—

a

the average exchange rate for the accounting period, or

b

the rate mentioned in subsection (3).

3

That rate is—

a

if the amount to be translated relates to a single transaction, an appropriate spot rate of exchange for the transaction, or

b

if the amount to be translated relates to more than one transaction, a rate of exchange derived on a just and reasonable basis from appropriate spot rates of exchange for those transactions.

4

Subsection (2) is subject to sections 12 and 13 (special rules where the translation is for the purpose of calculating carried-forward or carried-back amounts).