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Difference between AS 11 and Ind AS 21

Open uri20170510 32134 1ue0f38?1494421710 rohit agarwal asked about 3 years ago

What is the Difference between AS 11 and Ind AS 21 The Effects of Changes in Foreign Exchange Rates

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2 Answers
Open uri20170510 32134 1c996lj?1494421732 Anil answered over 2 years ago

Ind AS 21 excludes from its scope forward exchange contracts and other similar financial instruments, which are treated in accordance with Ind AS 39 Financial Instruments: Recognition and Measurement. The existing AS 11 does not such exclude accounting for such contracts. Ind AS 21 is based on functional currency approach whereas existing AS 11 is not. The existing AS 11 is based on integral foreign operations and non-integral foreign operations approach for accounting for a foreign operation, whereas Ind AS 21 is based on the functional currency approach. However, in Ind AS 21 the factors to be considered in determining an entity’s functional currency are similar to the indicators in existing AS 11 to determine the foreign operations as non-integral foreign operations. As a result, despite the difference in the term, there are no substantive differences in respect of accounting of a foreign operation. As per Ind AS 21, presentation currency can be different from local currency and it gives detailed guidance on this, whereas the existing AS 11 does not explicitly state so. Ind AS 21 permits an option to recognize exchange differences arising on translation of certain long-term monetary items from foreign currency to functional currency directly in equity. In this situation, Ind AS 21 requires the accumulated exchange differences to be transferred to profit or loss in an appropriate manner. AS 11 does not permit such a treatment.

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Picsjoin 2017224123730582 Archana answered about 3 years ago

Hie Rohit, **Difference between Ind AS 21 on The Effects of Changes in Foreign Exchange Rates and existing AS 11 on The Effects of Changes in Foreign Exchange Rates :-** 1. Ind AS 21 excludes from its scope forward exchange contracts and other similar financial instruments, which are treated in accordance with Ind AS 39 Financial Instruments: Recognition and Measurement. The existing AS 11 does not such exclude accounting for such contracts. 2. Ind AS 21 is based on functional currency approach whereas existing AS 11 is not. 3. The existing AS 11 is based on integral foreign operations and non-integral foreign operations approach for accounting for a foreign operation, whereas Ind AS 21 is based on the functional currency approach. However, in Ind AS 21 the factors to be considered in determining an entity’s functional currency are similar to the indicators in existing AS 11 to determine the foreign operations as non-integral foreign operations. As a result, despite the difference in the term, there are no substantive differences in respect of accounting of a foreign operation. 4. As per Ind AS 21, presentation currency can be different from local currency and it gives detailed guidance on this, whereas the existing AS 11 does not explicitly state so. 5. Ind AS 21 permits an option to recognize exchange differences arising on translation of certain long-term monetary items from foreign currency to functional currency directly in equity. In this situation, Ind AS 21 requires the accumulated exchange differences to be transferred to profit or loss in an appropriate manner. AS 11 does not permit such a treatment.

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