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

Sarvodaya Textiles Ltd, an Indian company, changed the functional currency of its significant foreign operation from US dollars to euros during the year because of a change in the underlying economic environment. As compared with IAS 21, which disclosure does Ind AS 21 require in addition to the fact of the change and the reason for it?

Ind AS 21 requires the entity to disclose the date of change in functional currency, in addition to the fact of the change and the reason for it, which are also required by IAS 21. This extra disclosure is a noted difference between Ind AS 21 and IAS 21.

  1. AThe date of change in functional currencyCorrect
  2. BThe cumulative exchange difference recycled to profit or loss
  3. CThe average exchange rate used for translation in the year
  4. DThe fair value of the foreign operation on the change date

Explanation

The comparison with IAS 21 in the Ind AS 21 appendix says IAS 21 requires disclosure of the fact and reason for a change in functional currency. Ind AS 21 additionally requires disclosure of the date of change. The other options are not the additional carve-out requirement mentioned there.

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