The document discusses the effective dates and objectives of Ind AS 21 and AS 11, which provide guidance on accounting for foreign currency transactions and foreign operations. It defines key terms like functional currency, foreign currency, monetary and non-monetary items. It explains how to determine functional currency and the process for translating foreign currency transactions and financial statements into the functional and presentation currencies. Specifically, it addresses initial recognition of transactions, remeasurement at each reporting date, and recognition of resulting exchange differences.
Fund flow statement is a statement that compares the two balance sheets by analyzing the sources of funds (debt and equity capital) and the application of funds (assets) and its reasons for any differences.
This slide is all about IFRS 2 share based payment. You can find its content summary & examples here. The link to access the video lectures is inserted in the final slide.
IAS-1: Presentation of Financial StatementsAmit Sarkar
IAS 1 Presentation of Financial Statements sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows.
Used for MBA professional accounting class room presentation and it includes FASB rules and forex currency dealings details for purchase and sale of goods and services with foreign party.
Fund flow statement is a statement that compares the two balance sheets by analyzing the sources of funds (debt and equity capital) and the application of funds (assets) and its reasons for any differences.
This slide is all about IFRS 2 share based payment. You can find its content summary & examples here. The link to access the video lectures is inserted in the final slide.
IAS-1: Presentation of Financial StatementsAmit Sarkar
IAS 1 Presentation of Financial Statements sets out the overall requirements for financial statements, including how they should be structured, the minimum requirements for their content and overriding concepts such as going concern, the accrual basis of accounting and the current/non-current distinction. The standard requires a complete set of financial statements to comprise a statement of financial position, a statement of profit or loss and other comprehensive income, a statement of changes in equity and a statement of cash flows.
Used for MBA professional accounting class room presentation and it includes FASB rules and forex currency dealings details for purchase and sale of goods and services with foreign party.
To prescribe how to include foreign currency transactions and foreign
operations in the financial statements of an entity and how to translate
financial statements into a presentation currency.
Translation of Foreign Currency in Financial Statements An.docxturveycharlyn
Translation of Foreign Currency in Financial Statements
And
Preparation of Journal Entries
This week’s focus is on the translation of foreign currency financial statements for the purpose of
preparing consolidated financials and also posting journal entries.
When preparing consolidated financial statements on a worldwide basis, the foreign currency financial
statements prepared by foreign operations must be translated into the parent company’s reporting
currency.
Issues related to this translation:
1. Which method should be used, and
2. Where should the resulting translation adjustment be reported in the consolidated financial
statements.
Translation methods differ on the basis of which accounts are translated at the current exchange rate
and which are translated at historical rates. Accounts translated at the current exchange rate are
exposed to translation adjustment (balance sheet exposure).
Different translation methods give rise to different concepts of balance sheet exposure and translation
adjustments of differing sign and magnitude.
There are four major methods of translating foreign currency financial statements:
1. current/noncurrent method
2. monetary/non-monetary method
3. temporal method
4. current rate
We will be focusing on the temporal and current rate methods.
CURRENT RATE METHOD
All assets and liabilities are translated at the current exchange rate giving rise to a balance sheet
exposure equal to the foreign subsidiary’s net assets. Stockholders’ equity accounts are translated at
historical exchange rates. Income statement items are translated at the average exchange rate for the
current period.
Appreciation of the foreign currency results in a positive translation adjustment
Depreciation of the foreign currency results in a negative translation adjustment
Translating all assets and liabilities at the current exchange rate maintains the relationships that exist in
the foreign currency financial statements.
Translating assets carried at historical cost at the current exchange rate results in amounts being
reported on the parent’s consolidated balance sheet that have no economic meaning.
TEMPORAL METHOD
A method of foreign currency translation that uses exchange rates based on the time assets and
liabilities are acquired or incurred. The exchange rate used also depends on the method of valuation
that is used. Assets and liabilities valued at current costs use the current exchange rate and those that
use historical exchange rates are valued at historical costs. Source: INVESTOPEDIA
With the temporal method assets are carried at current or future value (cash, marketable securities,
receivables) and liabilities are re-measured at the current exchange rate.
Assets carried at historical cost and stockholders’ equity accounts are re-measured at historical
exchange rates.
Expenses related to assets re ...
Question 12 20 pts Explain five criteria of Statement No. 52 in deter.pdfexpressionnoveltiesk
Question 12 20 pts Explain five criteria of Statement No. 52 in determining the foreign currency
as the functional currency. HTML Editor Paragraph ?
Solution
Answer) Application of this Statement will affect financial reporting of most companies
operating in foreign countries. The differing operating and economic characteristics of varied
types of foreign operations will be distinguished in accounting for them. Adjustments for
currency exchange rate changes are excluded from net income for those fluctuations that do not
impact cash flows and are included for those that do. The requirements reflect these general
conclusions:
The economic effects of an exchange rate change on an operation that is relatively self-contained
and integrated within a foreign country relate to the net investment in that operation. Translation
adjustments that arise from consolidating that foreign operation do not impact cash flows and are
not included in net income.
The economic effects of an exchange rate change on a foreign operation that is an extension of
the parent\'s domestic operations relate to individual assets and liabilities and impact the parent\'s
cash flows directly. Accordingly, the exchange gains and losses in such an operation are included
in net income.
Contracts, transactions, or balances that are, in fact, effective hedges of foreign exchange risk
will be accounted for as hedges without regard to their form.
More specifically, this Statement replaces FASB Statement No. 8, Accounting for the
Translation of Foreign Currency Transactions and Foreign Currency Financial Statements, and
revises the existing accounting and reporting requirements for translation of foreign currency
transactions and foreign currency financial statements. It presents standards for foreign currency
translation that are designed to (1) provide information that is generally compatible with the
expected economic effects of a rate change on an enterprise\'s cash flows and equity and (2)
reflect in consolidated statements the financial results and relationships as measured in the
primary currency in which each entity conducts its business (referred to as its \"functional
currency\").
An entity\'s functional currency is the currency of the primary economic environment in which
that entity operates. The functional currency can be the dollar or a foreign currency depending on
the facts. Normally, it will be the currency of the economic environment in which cash is
generated and expended by the entity. An entity can be any form of operation, including a
subsidiary, division, branch, or joint venture. The Statement provides guidance for this key
determination in which management\'s judgment is essential in assessing the facts.
A currency in a highly inflationary environment (3-year inflation rate of approximately 100
percent or more) is not considered stable enough to serve as a functional currency and the more
stable currency of the reporting parent is to be used instead.
The functio.
accounting and auditing in kautilya's arthashastra.pdfanjalichaudhary75
In the Indian context, accounting and auditing have a very long history. However, accounting, auditing, and fraud risk management system have evolved over time to meet the needs and challenges of the growing society.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
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how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
2. EFFECTIVE DATE OF IND AS 21 AND AS 11
Ind AS 21 was notified vide G.S.R. 111(E) dated 16th February, 2015
and was amended vide Notification No. G.S.R. 310(E) dated 28th March,
2018 and G.S.R. 273(E) dated 30th March, 2019.
AS 11 was notified vide Notification G.S.R. 739(E) dated 7th
December, 2006 and was amended vide Notification No. G.S.R. 225(E)
dated 31st March, 2009, Notification No. G.S.R. 378(E) dated 11th May,
2011, Notification No. G.S.R. 913 (E) dated 29th December, 2011 and
Notification No. G.S.R. 914 (E) dated 29th December, 2011.
* G.S.R means General Statutory Rules.
3. OBJECTIVE OF IND AS 21
A business may carry on foreign activities involving foreign exchange. In order to present
these activities in the financial statements, the standard is helpful.
Ways of Foreign Activities
1. transactions in foreign currencies
or
2. foreign operations.
The objective of the Standard is to prescribe how to include foreign currency transactions
and foreign operations in the financial statements of an entity and how to translate financial
statements into a presentation currency/ reporting currency.
The Standard provides proper guidelines for principal issues arising in foreign
activities. These are
1. which exchange rate(s) to use
and
2. how to report the effects of changes in exchange rates in the financial statements.
4. SCOPE/ APPLICABILITY OF IND AS 21 AND AS 11
Scope of Ind AS 21 Scope of AS 11
This Standard shall be applied-
a. In accounting for transactions and balances in
foreign currencies,
b. In translating the results and financial position of
foreign operations, and
c. In translating an entity’s results and financial
position into a presentation currency.
This standard shall not be applied-
a. For those derivatives transactions and balances that
are within the scope of Ind AS 109, Financial
Instruments;
b. to the presentation in a statement of cash flows of
the cash flows arising from transactions in a foreign
currency, or to the translation of cash flows of a
foreign operation,
c. to long-term foreign currency monetary items for
which an entity has opted for the exemption given
in Ind AS 101.
This Standard shall be applied-
a. in accounting for transactions in foreign
currencies;
b. in translating the financial statements of foreign
operations; and
c. In accounting for foreign currency transactions in
the nature of forward exchange contracts.
This Standard shall not be applied-
a. to the presentation in a statement of cash flows of
the cash flows arising from transactions in a foreign
currency, or to the translation of cash flows of a
foreign operation,
b. For the restatement of an enterprise’s financial
statements from its reporting currency into another
currency for the convenience of users accustomed
to that currency or for similar purposes,
c. On exchange differences arising from foreign
currency borrowings to the extent that they are
regarded as an adjustment to interest costs
5. IMPORTANT DEFINITIONS
Terms Definitions
currency Circulation as a medium of exchange.
Currency has three types-
1. Foreign Currency
2. Functional Currency
3. Presentation currency/ Reporting Currency
Foreign currency A currency other than the functional currency of the entity.
Functional currency A currency of the primary economic environment in which the entity operates (defined in Ind
AS 21).
Presentation currency The currency in which the financial statements are presented (defined in Ind AS 21).
Reporting currency The currency used in presenting the financial statements (defined in AS 11).
Fair value The price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date.
A group a parent and all its subsidiaries.
6. IMPORTANT DEFINITIONS
Terms Definitions
Exchange rate The ratio for exchange of two currencies.
Spot exchange rate The exchange rate for immediate delivery.
Closing rate The exchange rate at the balance sheet date.
Average rate The mean of the exchange rates in force during a period.
Exchange Difference The difference resulting from reporting the same number of units of a foreign currency in
the reporting currency at different exchange rates (defined in AS 11).
Or
The difference resulting from translating a given number of units of one currency into
another currency at different exchange rates (defined in Ind AS 21).
Foreign operation An entity that is a subsidiary, associate, joint arrangement or branch of a reporting entity,
the activities of which are based or conducted in a country or currency other than those of
the reporting entity of which it is a subsidiary, branch, associate or joint arrangement.
7. FOREIGN CURRENCY TRANSACTIONS (FCT)
It is a transaction that is denominated or requires settlement in a
foreign currency.
Nature of FCT
a. buying or selling goods or services whose price is denominated
in a foreign currency;
b. borrowing or lending funds when the amounts payable or
receivable are denominated in a foreign currency; or
c. acquiring or disposing of assets, or incurs or settles liabilities,
denominated in a foreign currency.
9. MONETARY AND NON MONETARY ITEMS
Monetary item Non monetary item
a right to receive or an obligation to deliver a
fixed or determinable number of units of
currency.
Examples-
pensions and other employee benefits to
be paid in cash;
provisions that are to be settled in cash;
lease liabilities; and
cash dividends that are recognized as a
liability.
a contract to receive or deliver a variable
number of the entity’s own equity
instruments or a variable amount of assets in
which the fair value to be received or
delivered equals a fixed or determinable
number of units of currency is also a
monetary item.
Absence of a right to receive or an obligation
to deliver a fixed or determinable number of
units of currency.
Examples-
amounts prepaid for goods and services;
goodwill;
intangible assets;
inventories;
property, plant and equipment (PPE);
right-of-use assets and
provisions that are to be settled by the
delivery of a non-monetary asset.
10. FUNCTIONAL CURRENCY
(ELABORATED AND DEFINED IN IND AS 21)
Factors to determine entity Functional Currency -
An entity considers the following factors Primarily (primary indicators) in
determining its functional currency:
a. the currency that mainly influences sales prices for goods and services;
b. the currency of the country whose competitive forces and regulations
mainly determine the sales prices of its goods and services; and
c. the currency that mainly influences labor, material and other costs of
providing goods or services.
The secondary factors may also provide evidence of an entity’s functional currency:
a. the currency in which funds from financing activities (i.e. issuing debt and
equity instruments) are generated; and
b. the currency in which receipts from operating activities are usually retained.
11. FUNCTIONAL CURRENCY
(ELABORATED AND DEFINED IN IND AS 21)
Factors to determine entity Functional Currency-
Additional factors to determine the functional currency of a foreign operation,
and whether entity functional currency is the same as that of the reporting entity of which
it is a subsidiary, branch, associate or joint arrangement-
a. whether the activities of the foreign operation are carried out as an
extension of the reporting entity, rather than being carried out with a
significant degree of autonomy;
b. whether transactions with the reporting entity are a high or a low
proportion of the foreign operation’s activities;
c. whether cash flows from the activities of the foreign operation directly affect
the cash flows of the reporting entity and are readily available for
remittance to it; and
d. whether cash flows from the activities of the foreign operation are sufficient to
service existing and normally expected debt obligations without funds being made
available by the reporting entity.
12. FUNCTIONAL CURRENCY
(ELABORATED AND DEFINED IN IND AS 21)
Factors to determine entity Functional Currency –
When the functional currency is not obvious, management uses its judgement to
determine the functional currency that most faithfully represents the economic effects of the
underlying transactions, events and conditions.
management gives priority to the primary indicators before considering other factors.
Once determined, the functional currency is not changed unless there is a change in those
underlying transactions, events and conditions.
When there is a change in an entity’s functional currency, the entity shall apply the
translation procedures applicable to the new functional currency prospectively from the date of
the change.
If the functional currency is the currency of a hyperinflationary economy, the entity’s
financial statements are restated in accordance with Ind AS 29, Financial Reporting in
Hyperinflationary Economies.
13. FUNCTIONAL CURRENCY
(ELABORATED AND DEFINED IN IND AS 21)
Reporting foreign currency transactions in the functional currency
Initial Recognition
• A foreign currency transaction shall be recorded in the functional currency
• apply the spot exchange rate between the functional currency and the foreign
currency
• to the foreign currency amount
• at the date of the transaction i.e. first qualifies transaction date for recognition in
accordance with Ind ASs.
At the End of Each Reporting Period
a. foreign currency monetary items shall be translated using the closing rate;
b. non-monetary items that are measured in terms of historical cost in a foreign
currency shall be translated using the exchange rate at the date of the transaction;
and
c. non-monetary items that are measured at fair value in a foreign currency shall be
translated using the exchange rates at the date when the fair value was measured.
14. FUNCTIONAL CURRENCY
(ELABORATED AND DEFINED IN IND AS 21)
Reporting foreign currency transactions in the functional currency
At the end of each reporting period
15. FUNCTIONAL CURRENCY
(ELABORATED AND DEFINED IN IND AS 21)
Reporting foreign currency transactions in the functional currency-
The carrying amount of an item is determined in conjunction with other
relevant Standards. For example, property, plant and equipment may be
measured in terms of fair value or historical cost in accordance with Ind AS 16,
Property, Plant and Equipment.
The carrying amount of some items is determined by comparing two or more
amounts. For example,
Inventories (a non-monetary item and measured in a foreign currency)
Carrying cost of inventory < cost and net realizable value in accordance
with Ind AS 2, Inventories,
In accordance with Ind AS 36, Impairment of Assets, This is the indication
of impairment,
16. FUNCTIONAL CURRENCY
(ELABORATED AND DEFINED IN IND AS 21)
Reporting foreign currency transactions in the functional currency-
the carrying amount is determined by comparing:
a. the cost or carrying amount, as appropriate, translated at the exchange rate at
the date when that amount was determined (i.e. the rate at the date of the
transaction for an item measured in terms of historical cost);
and
a. the net realizable value or recoverable amount, as appropriate, translated at
the exchange rate at the date when that value was determined (e.g. the closing
rate at the end of the reporting period).
The effect of this comparison may be that an impairment loss is recognized in the functional
currency but would not be recognized in the foreign currency, or vice versa
17. FUNCTIONAL CURRENCY
(ELABORATED AND DEFINED IN IND AS 21)
Reporting foreign currency transactions in the functional currency-
When several exchange rates are available, the rate used is that at which the future cash
flows represented by the transaction or balance could have been settled if those cash flows
had occurred at the measurement date. If exchangeability between two currencies is
temporarily lacking, the rate used is the first subsequent rate at which exchanges could be
made.
18. RECOGNITION OF EXCHANGE DIFFERENCES
Exchange difference (Exchange gain or loss) is the difference resulting from translating
a given number of units of one currency into another currency at different exchange
rates.
The exchange differences arise when -
the foreign currency transactions are converted to functional currency or
the functional currency is translated into presentation currency.
Exchange gain or loss on a monetary item
Exchange difference in case of a foreign currency transaction, pertaining to
a monetary item can arise in the following situations-
settlement of monetary items arising from foreign currency transactions,
Reporting the monetary item in the financial statement, at a rate which is different
from the transaction date rate; and
Reporting the monetary item in the current period financial statements, at an
exchange rate which is different from the exchange rate used in the previous year’s
financial statement.
19. RECOGNITION OF EXCHANGE DIFFERENCES
Transaction settled during the same accounting period in case of monetary items:
Where a transaction is settled within the same accounting period as that in which it occurred,
all exchange differences are recognized in the that period.
Transaction NOT settled during the same accounting period in case of monetary
items : when the transaction is settled in a subsequent accounting period, the exchange
difference recognized in each period up to the date of settlement is determined by the change in
exchange rates during each period.
20. RECOGNITION OF EXCHANGE DIFFERENCES
Exchange differences arising on a monetary item that forms part of a reporting
entity’s net investment in a foreign operation should be treated as follows:
Such exchange differences shall be recognized in profit or loss in the separate
financial statements of the reporting entity or the individual financial
statements of the foreign operation, as appropriate:
If such an item is denominated in the functional currency of the foreign operation,
an exchange difference arises in the reporting entity’s separate financial
statements.
If such an item is denominated in the functional currency of the reporting entity,
an exchange difference arises in the foreign operation’s individual financial
statements
If such an item is denominated in a currency other than the functional currency of
either the reporting entity or the foreign operation, an exchange difference arises in
the reporting entity’s separate financial statements and in the foreign operation’s
individual financial statements.
21. RECOGNITION OF EXCHANGE DIFFERENCES
In the financial statements that include the foreign operation and the reporting
entity (e.g. consolidated financial statements when the foreign operation is a
subsidiary), such exchange differences shall be recognized initially in other
comprehensive income and reclassified from equity to profit or loss on disposal of the
net investment.
When an entity keeps its books and records in a currency other than its functional currency, at
the time the entity prepares its financial statements all amounts are translated into the
functional currency.
22. RECOGNITION OF EXCHANGE DIFFERENCES
Exchange gain or loss on a non-monetary item
When a gain or loss on a non-monetary item is recognized in other comprehensive
income, any exchange component of that gain or loss shall be recognized in other
comprehensive income. Conversely, when a gain or loss on a non-monetary item is recognized
in profit or loss, any exchange component of that gain or loss shall be recognized in profit or
loss.
For example, Ind AS 16 requires some gains and losses arising on a revaluation of property,
plant and equipment to be recognized in other comprehensive income. When Ind AS 21, The
Effects of Changes in Foreign Exchange Rates such an asset is measured in a foreign currency,
this Standard requires the revalued amount to be translated using the rate at the date the value
is determined, resulting in an exchange difference that is also recognized in other
comprehensive income.
23. USE OF A PRESENTATION CURRENCY OTHER THAN THE FUNCTIONAL
CURRENCY
An entity may present its financial statements in any currency (or currencies). If the
presentation currency differs from the entity’s functional currency, it translates its results and
financial position into the presentation currency.
The results and financial position of an entity whose functional currency is not the
currency of a hyperinflationary economy shall be translated into a different presentation
currency using the following procedures:
assets and liabilities for each balance sheet presented (i.e. including comparatives)
shall be translated at the closing rate at the date of that balance sheet;
income and expenses for each statement of profit and loss presented (i.e. including
comparatives) shall be translated at exchange rates at the dates of the
transactions; and
all resulting exchange differences shall be recognized in other comprehensive
income.
24. USE OF A PRESENTATION CURRENCY OTHER THAN THE FUNCTIONAL
CURRENCY
The results and financial position of an entity whose functional currency is the currency
of a hyperinflationary economy shall be translated into a different presentation currency
using the following procedures:
all amounts (i.e. assets, liabilities, equity items, income and expenses, including
comparatives) shall be translated at the closing rate at the date of the most recent
balance sheet, except that
when amounts are translated into the currency of a no hyperinflationary economy,
comparative amounts shall be those that were presented as current year amounts in the
relevant prior year financial statements (i.e. not adjusted for subsequent changes in the
price level or subsequent changes in exchange rates).
25. TRANSLATION OF A FOREIGN OPERATION INTO A PRESENTATION
CURRENCY
when the results and financial position of a foreign operation are translated into a presentation
currency so that the foreign operation can be included in the financial statements of the
reporting entity by consolidation or the equity method.
The incorporation of the results and financial position of a foreign operation with those of the
reporting entity follows normal consolidation procedures.
Any goodwill arising on the acquisition of a foreign operation and any fair value adjustments
to the carrying amounts of assets and liabilities arising on the acquisition of that foreign
operation shall be treated as assets and liabilities of the foreign operation. Thus they shall be
expressed in the functional currency of the foreign operation and shall be translated at the
closing rate.
26. DIFFERENCE IN REPORTING DATES
When the financial statements of a foreign operation are as of a date different from that of the
reporting entity, the foreign operation often prepares additional statements as of the
same date as the reporting entity’s financial statements.
When additional statements is not prepared, Ind AS 110 allows the use of a different date
provided that the difference is no greater than three months and adjustments are made for the
effects of any significant transactions or other events that occur between the different dates. In
such a case, the assets and liabilities of the foreign operation are translated at the exchange rate
at the end of the reporting period of the foreign operation. Adjustments are made for
significant changes in exchange rates up to the end of the reporting period of the reporting
entity in accordance with Ind AS 110. The same approach is used in applying the equity method
to associates and joint ventures in accordance with Ind AS 28.
27. DISCLOSURE REQUIREENTS
‘functional currency’ of an entity, in the case of a group, to the functional currency of the
parent.
An entity shall disclose:
the amount of exchange differences recognized in profit or loss except for those arising
on financial instruments measured at fair value through profit or loss in accordance with
Ind AS 109; and
net exchange differences recognized in other comprehensive income and accumulated in
a separate component of equity, and a reconciliation of the amount of such exchange
differences at the beginning and end of the period.
When the presentation currency is different from the functional currency, that fact shall be
stated, together with disclosure of the functional currency and the reason for using a
different presentation currency.
When there is a change in the functional currency of either the reporting entity or a
significant foreign operation, that fact, the reason for the change in functional currency and
the date of change in functional currency shall be disclosed.
28. DISCLOSURE REQUIREENTS
When an entity displays its financial statements or other financial information in a currency
that is different from either its functional currency or its presentation currency it shall:
clearly identify the information as supplementary information to distinguish it from
the information that complies with Ind ASs;
disclose the currency in which the supplementary information is displayed; and
disclose the entity’s functional currency and the method of translation used to
determine the supplementary information.