Home › CA Final › financialreporting › Ind AS 21 — Foreign Currency Transactions: Functional Currency Determination, Scope, Definitions › When the indicators are MIXED and functional cur…
When the indicators are MIXED and functional currency is not obvious, Ind AS 21 requires management to:
ADefault to the local currency of the country of incorporation
BUse the presentation currency
CUse JUDGEMENT to determine the functional currency that most faithfully represents the economic effects, PRIORITISING primary indicators before secondary indicators
DUse the parent's functional currency
Answer & Solution
Correct answer: C. Use JUDGEMENT to determine the functional currency that most faithfully represents the economic effects, PRIORITISING primary indicators before secondary indicators
Paragraph 12: judgemental determination required when indicators are mixed. Primary indicators (sales-pricing currency + cost-determining currency) take priority over secondary (financing, receipts retention). Country-of-incorporation default is incorrect.
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 Under Ind AS 21, the PRIMARY indicators for functional currency are:S Ltd is India-based, imports motorcycles from US in USD, sells in India to corporates (US