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CA Final · Financial Reporting · Ind AS 21 The Effects of Changes in Foreign Exchange Rates

Kaveri Exports Ltd adopted Ind AS for the first time and, on transition, opted for the exemption in paragraph D13AA of Appendix D to Ind AS 101. It continues its previous GAAP policy for exchange differences on long-term foreign currency monetary items. How does Ind AS 21 treat these items?

Such items are scoped out of Ind AS 21 by paragraph 7AA. Because the entity opted for the Ind AS 101 D13AA exemption, it continues its previous GAAP policy for exchange differences on those long-term foreign currency monetary items rather than applying Ind AS 21 to them.

  1. AThey are outside the scope of Ind AS 21 through paragraph 7AACorrect
  2. BThey must be restated retrospectively under Ind AS 21 as if never exempted
  3. CThey are within Ind AS 21 but only for disclosure
  4. DThey are translated at the average rate for the year

Explanation

Paragraph 7AA was inserted to scope out long-term foreign currency monetary items for which the entity opted for the D13AA exemption in Ind AS 101. So Ind AS 21 does not apply to the exchange differences on those items, and the previous GAAP policy continues.

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