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

Veda Textiles Ltd, an Indian company, changes the functional currency of its significant foreign operation in Dubai from AED to USD because of a change in underlying circumstances. Compared with IAS 21, what additional disclosure does Ind AS 21 require in respect of this change?

Ind AS 21 requires disclosure of the date of change in functional currency in addition to the fact of the change and its reason, which IAS 21 already requires. This extra date requirement is the difference from IAS 21 in the Indian standard.

  1. AThe date of change in functional currency, besides the fact of the change and the reason for itCorrect
  2. BOnly the reason for the change, since the fact of change is evident from the statements
  3. CA restatement of all prior-period comparatives into USD
  4. DThe tax effect of the change on deferred tax balances

Explanation

IAS 21 requires disclosure of the fact of change in functional currency and the reason for it. Ind AS 21 requires an additional disclosure of the date of change in functional currency. Restating comparatives is not the required disclosure because a change in functional currency is applied prospectively.

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