SIC 7 address the introduction of the Euro and the results thereof on the application of the IAS 21- The effects of changes in foreign currency rates when a country joins the European Economic and Monetary Units.
SIC 7 specifically states that any country that joins the European Economic and Monetary Units shall strictly follow the requirements of the IAS 21- The effects of changes in foreign currency rates.
Any foreign currency monetary liabilities and assets resulting from the transactions shall be translated into the functional currency at the closing rate. If there is any exchange difference then it shall be recognized as either income or loss in the financial statements. However, there is an exception to this rule and the exchange gain or loss shall not be recognized in the financial statements if an entity adopts the accounting policy for the exchange gain or loss related to hedges of the currency risk of a forecast transaction.
The cumulative exchange difference that arises from the translation of financial statements of foreign operations shall be recognized in the statement of comprehensive income. If there is arises gain or loss on the disposal of the net investments then it shall be recognized in the statement of comprehensive income in the same manners just like the translation gain or loss.
Any exchange differences that arise from the translation of liabilities which is denominated in participating currencies shall not be included in the carrying amount of the related assets.