Skip to content

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

Sundaram Textiles Ltd, an Indian company, changed the functional currency of its significant foreign operation in Dubai from AED to USD during the year because of a change in underlying circumstances. Which disclosure is required by Ind AS 21 in this situation, going beyond what IAS 21 requires?

Ind AS 21 requires disclosure of the fact that functional currency changed, the reason for the change, and additionally the date of the change. IAS 21 requires only the fact and the reason, so the date of change is the extra Ind AS disclosure requirement.

  1. AOnly the fact of the change and the reason for it
  2. BThe fact of the change, the reason for it, and the date of the change in functional currencyCorrect
  3. COnly the date of the change in functional currency
  4. DThe fact of the change and the cumulative exchange difference recomputed from the date of incorporation

Explanation

Ind AS 21 requires disclosure of the fact of the change in functional currency and the reason, as IAS 21 does. Ind AS 21 adds a further requirement to disclose the date of change. The first option is the IAS 21 position and omits this additional Ind AS requirement.

Did you get it right without looking?

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

Practise Ind AS 21 The Effects of Changes in Foreign Exchange RatesFree diagnostic mock

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