| 2.4 | Foreign currency and unidad de fomento (Adjustment unit) |
Presentation and functional currency
The Company uses the Chilean peso (Ch$ or CLP) as its functional currency and for the presentation of its financial statements. The functional currency has been determined considering the economic environment in which the Company carries out its operations and the currency in which the main cash flows are generated. The functional currency of the Argentinian, Uruguayan and Paraguayan subsidiaries is the Argentine peso, Uruguayan Peso and Paraguayan guarani, respectively. The functional currency of the joint venture and associates in Colombia and Bolivia are the Colombian peso and Bolivian peso, respectively.
Transactions and balances
Transactions in foreign currencies and adjustment units (“Unidad de Fomento” or “UF”) are initially recorded at the exchange rate of the corresponding currency or adjustment unit as of the date on which the transaction occurs. The Unidad de Fomento (UF) is a Chilean inflation-indexed peso-denominated monetary unit. The UF rate is set daily in advance based on changes in the previous month’s inflation rate. At the close of each Consolidated Statement of Financial Position, the monetary assets and liabilities denominated in foreign currencies and adjustment units are translated into Chilean pesos at the exchange rate of the corresponding currency or adjustment unit. The exchange difference arising, both from the liquidation of foreign currency transactions, as well as from the valuation of foreign currency monetary assets and liabilities, is included in statement of income, in Foreign currency exchange differences, while the difference arising from the changes in adjustment units are recorded in the statement of income as Result as per adjustment units.
For consolidation purposes, the assets and liabilities of the subsidiaries whose functional currency is different from the Chilean peso are translated into Chilean pesos by using the exchange rates valid as of the date of the consolidated financial statements, and the exchange differences originated by the translation of the assets and liabilities are recorded in Equity Reserve, under the Currency Translation Reserves item. The income and expense are translated at the monthly average exchange rate for the corresponding terms as differences since there have not been significant fluctuations in the exchange rates during each month.
The exchange rates of the primary foreign currencies and adjustment units used in the preparation of the consolidated financial statements as of December 31, 2017, 2016 and 2015 are detailed as follows:
| Chilan Pesos as pero unit of foreign currency or adjustable unit | | As of December
31, 2017 | | As of December
31, 2016 | | As of December
31, 2015 | |
| | | | | Ch$ | | Ch$ | | Ch$ | |
| Foreign currencies | | | | | | | | | | | | |
| US Dollar | | USD | | | 614.75 | | | 669.47 | | | 710.16 | |
| Euros | | EUR | | | 739.15 | | | 705.60 | | | 774.61 | |
| Argentine Peso | | ARS | | | 32.96 | | | 42.13 | | | 54.46 | |
| Uruguayan Peso | | UYU | | | 21.34 | | | 22.82 | | | 23.71 | |
| Canadian Dollar | | CAD | | | 491.05 | | | 498.38 | | | 511.50 | |
| Sterling Pound | | GBP | | | 832.09 | | | 826.10 | | | 1,053.02 | |
| Paraguayan Guarani | | PYG | | | 0.11 | | | 0.12 | | | 0.12 | |
| Bolivians | | BS | | | 89.61 | | | 97.59 | | | 103.67 | |
| Colombian Peso | | COP | | | 0.21 | | | 0.22 | | | 0.22 | |
| Adjustment Units | | | | | | | | | | | | |
| Unidad de fomento (*) | | UF | | | 26,798.14 | | | 26,347.98 | | | 25,629.09 | |
(*) The Unidad de Fomento (UF) is a Chilean inflation-indexed, peso-denominated monetary unit. The UF rate is set daily in advance based on changes in the previous month´s inflation rate.
