Home › CA Final › financialreporting › Ind AS 21 — Foreign Currency Transactions: Functional Currency Determination, Scope, Definitions › A is an Oman-based co (OMR functional). B is A's…
A is an Oman-based co (OMR functional). B is A's India operation; 78% finance raised in USD from A; revenues in USD; competitors global; costs 70% INR + 30% USD; bank accounts in USD + INR; cash to A in USD. Identify B's functional currency.
AUSD — primary indicators: revenue + competitive forces + significant financing (78%) all in USD; INR cost is significant but secondary; USD best reflects primary economic environment
BOMR — same as parent
CMix of USD and INR
DINR — B is located in India
Answer & Solution
Correct answer: A. USD — primary indicators: revenue + competitive forces + significant financing (78%) all in USD; INR cost is significant but secondary; USD best reflects primary economic environment
Primary indicators (revenue currency, sales-price-influencing currency, competitive forces) all point to USD. INR cost is significant but not decisive — primary indicators outweigh. USD is functional currency, regardless of location in India.
Related questions
Long-term foreign-currency monetary items for which Ind AS 101 first-time-adoption EXEMPTIUnder Ind AS 21, MONETARY ITEMS are:An entity changes its FUNCTIONAL CURRENCY because the primary economic environment has subAn entity is undecided between two possible functional currencies. Per Ind AS 21, the secoIdentify the statement about functional vs presentation currency under Ind AS 21 that is IAdditional factors specific to a FOREIGN OPERATION (subsidiary, branch, associate, JV) in When the indicators are MIXED and functional currency is not obvious, Ind AS 21 requires mUnder Ind AS 21, the PRIMARY indicators for functional currency are: