How are monetary assets and liabilities such as receivables and payables measured at each period?

Monetary assets and liabilities, such as receivables and payables, are measured using the closing rate at the end of each reporting period. This is done because monetary items are susceptible to changes in currency exchange rates over time, and the closing rate reflects the most current value of the currency in which the transactions are denominated.

When financial statements are prepared, using the closing rate allows for the accurate representation of the financial position at that specific point in time. It ensures that any adjustments in fair value due to exchange rate fluctuations are captured, providing a clearer picture of the entity's financial health.

The closing rate is particularly relevant under the accrual basis of accounting, where the effects of changes in currency values must be recognized to provide stakeholders with relevant information. Other methods, such as using the historical rate or average exchange rate, do not reflect the current financial condition as accurately since they rely on past values instead of the most pertinent information at the reporting date.