Download Quick Reference on Indian Accounting Standard (Ind AS) 21, The Effects of Changes in Foreign Exchange Rates
Ind AS 21: The Effects of Changes in Foreign Exchange Rates
An entity may carry on foreign activities in two ways. It may have transactions in foreign currencies or it may have foreign operations. In addition, an entity may present its financial statements in a foreign currency. The objective of this 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.
The principal issues are which exchange rate(s) to use and how to report the effects of changes in exchange rates in the financial statements.
Exchange difference is the difference resulting from translating a given number of units of one currency into another currency at different exchange rates.
Foreign currency is a currency other than the functional currency of the entity.
Functional currency is the currency of the primary economic environment in which the entity operates.