Foreign currency transactions: rules for recognition, year end translation and treatment of exchange differences under accounting standard. ICDS VI prescribes recognition and measurement of foreign currency transactions, translation of foreign operations and treatment of forward exchange contracts for income computation. Transactions are initially recorded at the transaction date rate or appropriate average; monetary items are converted at closing rate at year end (adjusted where closing rate is not realizable), non monetary items at transaction date rate, and exchange differences on monetary items are recognised in the year of settlement or conversion. Premiums or discounts on forward contracts are amortised and exchange differences recognised during the contract life, except for contracts for trading or those hedging firm commitments or highly probable forecasts.