Foreign subsidiaries, associates, and branches often handle their accounts and prepare financial statements in the respective currencies of the countries in which they are located. IFRS governing the translation of foreign currency financial statements and the accounting for foreign currency transactions are found primarily in IAS 21, The Effects of Changes in Foreign Exchange Rates. IAS 21 applies to: 1. Accounting for foreign currency transactions (exports, imports, and loans) which are denominated in other than the reporting entity's functional currency. 2. Translation of foreign currency financial statements of branches, divisions, subsidiaries, and other investees that are incorporated in the financial statements of an entity by consolidation, proportionate consolidation, or the equity method of accounting. The objective of IAS 21 is to prescribe (1) how to include foreign currency transactions and foreign operations in the financial statements of an entity, and (2) how to translate financial statements into a presentation currency.