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

Sagar Textiles Ltd, an Indian company, changed the functional currency of its significant foreign operation in Dubai from AED to USD with effect from 1 October 2025. Which disclosure is required under Ind AS 21 in respect of this change, compared with the corresponding IAS 21 requirement?

Ind AS 21 requires disclosure of the fact that the functional currency changed and the reason for the change, and it additionally requires disclosure of the date of the change. This date requirement is the carve-in over IAS 21, which asks only for the fact and the reason.

  1. AOnly the fact of the change and the reason, as required by IAS 21
  2. BThe fact of the change, the reason for it and, additionally under Ind AS 21, the date of change in functional currencyCorrect
  3. COnly the date of change, since the reason is already evident from the facts
  4. DNo disclosure, because the change affects only a foreign operation and not the reporting entity

Explanation

IAS 21 requires disclosure of the fact of the change in functional currency of the reporting entity or a significant foreign operation, and the reason. Ind AS 21 adds a requirement to disclose the date of change. The option listing only the fact and reason reflects IAS 21 and therefore misses the Ind AS addition.

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