Skip to content

CMA Final · Corporate Financial Reporting · The Effects of Changes in Foreign Exchange Rates (Ind AS 21)

Paragraph 7AA of Ind AS 21 is described in the comparison with IAS 21 as a scope exclusion. Which items does it scope out?

Paragraph 7AA scopes out long-term foreign currency monetary items for which the entity opted for the exemption in paragraph D13AA of Appendix D to Ind AS 101. Those entities keep their previous GAAP policy on exchange differences for such items.

  1. AAll foreign currency monetary items of a first-time adopter
  2. BLong-term foreign currency monetary items for which the entity opted for the exemption in paragraph D13AA of Appendix D to Ind AS 101, continuing its previous GAAP policy for exchange differencesCorrect
  3. CForeign currency derivatives that are not designated as hedges
  4. DNet investments in a foreign operation measured at cost

Explanation

Paragraph 7AA was inserted to scope out long-term foreign currency monetary items for which the entity chose the D13AA exemption in Ind AS 101. Such an entity continues the previous GAAP policy for exchange differences on them. It is not a blanket exclusion of all monetary items, so the first option is wrong.

Did you get it right without looking?

One question tells you little. A timed set on The Effects of Changes in Foreign Exchange Rates (Ind AS 21) shows your real accuracy, how long you take and where you lose marks.

Practise The Effects of Changes in Foreign Exchange Rates (Ind AS 21)Free diagnostic mock

More The Effects of Changes in Foreign Exchange Rates (Ind AS 21) questions