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20151 Presentation by: CA Varun Sethi Private
• Factors for consideration
in determination of
functional currency.
• Initial and subsequent
recognition, measurement
of FCT &
• A/c for Exchange
Differences
IndAS 21: Scope
The Effects of Changes in Foreign Exchange Rates
CA Varun
Sethi
09899766487
Determination of
functional currency
Foreign Currency
Translation
(CFS/SFS)
1 3
Foreign Currency
transactions (FCT)
(Re)Measurement
2
Para 9 - 14 Para 38– 50Para 20 – 37 & 50
• A/c for translation of
financial statements for
presentation in
presentation currency
other than functional
currency.
20152 Presentation by: CA Varun Sethi Private
1. In Functional currency
2. At Spot /Average
Exchange Rate
3. As on transaction date
IndAS 21: Para 20 - 26
Accounting for ‘Foreign Currency transactions’
CA Varun
Sethi
09899766487
Initial Recognition
Subsequent Recognition
(Each reporting date)
1 2
Foreign currency Non-monetary items
Historical Cost
Foreign
currency
monetary items
Fair value
NMI Measured at
1. In Functional
currency
2. At Closing
Exchange Rate
1. In Functional
currency
2. At transaction
date exchange
Rate
1. In Functional
currency
2. At FV
determination
date exchange
Rate
20153 Presentation by: CA Varun Sethi Private
ED Recognized initially in OCI ED Recognized in Income Statement in the
period in which they arise
IndAS 21: Para 27 - 31
Accounting for ‘Exchange differences’ on Foreign Currency transactions
CA Varun
Sethi
09899766487
Exchange differences (ED)* on
MONETARY ITEMS
Exchange differences (ED) on
NON MONETARY ITEMS (NMI)
1 2
Hedging
Instruments (HI)
Gain or Loss on
NMI recognized
in OCI
Other than HI
Gain or Loss on
NMI recognized
in PL
*EXCLUDING Exchange differences arising from translation of long-term foreign currency monetary items recognized in the
financial statements as of First Time adoption of IndAS
20154 Presentation by: CA Varun Sethi Private
ED Recognized in Income
Statement/ Profit and Loss.
ED Recognized
in OCI initially
IndAS 21: Para 32 – 34, 48 - 49
The Effects of Changes in Foreign Exchange Rates
CA Varun
Sethi
09899766487
Exchange differences (ED) on MONETARY ITEMS
forming part of a reporting entity’s ‘net investment in a foreign operation’
(for which settlement is neither planned nor likely to occur in the foreseeable future)
SFS of
Parent
On *Partial/ Full
Disposal* of
foreign operation
SFS of
Foreign
operation
Before any
Disposal of
foreign operation
• *Disposal = Resulting in loss of control
• SFS = Separate Financial Statements
• CFS = Consolidated Financial Statements
CFS
On Partial Disposal
NOT resulting in
loss of control of
foreign operation
Re-attribute the
proportionate
share to NCI
Reclassify
parent’s share of
ED from OCI to
profit or loss.

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CA Varun Sethi Ind AS 21 - The effects of changes in foreign exchange rates

  • 1. 20151 Presentation by: CA Varun Sethi Private • Factors for consideration in determination of functional currency. • Initial and subsequent recognition, measurement of FCT & • A/c for Exchange Differences IndAS 21: Scope The Effects of Changes in Foreign Exchange Rates CA Varun Sethi 09899766487 Determination of functional currency Foreign Currency Translation (CFS/SFS) 1 3 Foreign Currency transactions (FCT) (Re)Measurement 2 Para 9 - 14 Para 38– 50Para 20 – 37 & 50 • A/c for translation of financial statements for presentation in presentation currency other than functional currency.
  • 2. 20152 Presentation by: CA Varun Sethi Private 1. In Functional currency 2. At Spot /Average Exchange Rate 3. As on transaction date IndAS 21: Para 20 - 26 Accounting for ‘Foreign Currency transactions’ CA Varun Sethi 09899766487 Initial Recognition Subsequent Recognition (Each reporting date) 1 2 Foreign currency Non-monetary items Historical Cost Foreign currency monetary items Fair value NMI Measured at 1. In Functional currency 2. At Closing Exchange Rate 1. In Functional currency 2. At transaction date exchange Rate 1. In Functional currency 2. At FV determination date exchange Rate
  • 3. 20153 Presentation by: CA Varun Sethi Private ED Recognized initially in OCI ED Recognized in Income Statement in the period in which they arise IndAS 21: Para 27 - 31 Accounting for ‘Exchange differences’ on Foreign Currency transactions CA Varun Sethi 09899766487 Exchange differences (ED)* on MONETARY ITEMS Exchange differences (ED) on NON MONETARY ITEMS (NMI) 1 2 Hedging Instruments (HI) Gain or Loss on NMI recognized in OCI Other than HI Gain or Loss on NMI recognized in PL *EXCLUDING Exchange differences arising from translation of long-term foreign currency monetary items recognized in the financial statements as of First Time adoption of IndAS
  • 4. 20154 Presentation by: CA Varun Sethi Private ED Recognized in Income Statement/ Profit and Loss. ED Recognized in OCI initially IndAS 21: Para 32 – 34, 48 - 49 The Effects of Changes in Foreign Exchange Rates CA Varun Sethi 09899766487 Exchange differences (ED) on MONETARY ITEMS forming part of a reporting entity’s ‘net investment in a foreign operation’ (for which settlement is neither planned nor likely to occur in the foreseeable future) SFS of Parent On *Partial/ Full Disposal* of foreign operation SFS of Foreign operation Before any Disposal of foreign operation • *Disposal = Resulting in loss of control • SFS = Separate Financial Statements • CFS = Consolidated Financial Statements CFS On Partial Disposal NOT resulting in loss of control of foreign operation Re-attribute the proportionate share to NCI Reclassify parent’s share of ED from OCI to profit or loss.