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

Kaveri Textiles Ltd, an Indian listed company, determined that the functional currency of its significant Singapore subsidiary changed from the Singapore dollar to the US dollar because the subsidiary's sales and financing shifted to US dollars. Under Ind AS 21 as notified in India, which disclosure is required about this change?

Ind AS 21 requires disclosure of the fact that the functional currency has changed, the reason for the change, and, as an additional Indian requirement over IAS 21, the date of the change. Omitting the date would leave the disclosure incomplete under the Indian standard.

  1. AOnly the fact of the change, because the reasons are commercially sensitive
  2. BThe fact of the change and the reason for it, with no need to give a date
  3. CThe fact of the change, the reason for it and the date of change in functional currencyCorrect
  4. DOnly the date of change, because the reason is evident from the financial statements

Explanation

IAS 21 requires disclosure of the fact of a change in functional currency and the reason for it. Ind AS 21 adds a requirement to disclose the date of change in functional currency. The option omitting the date reflects IAS 21 only and is incomplete for Ind AS 21.

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