Depreciation on fa invesment set c at cost ie at the

depreciation on FA, Invesment set c)
At Cost i.e. at the
exchange rate on the
date of purchase
Opening Stock Opening exchange rate
Closing Stock Closing exchange rate
Revenue nature items (Incomes and
expenses)
Average rate

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Goods sent to branch a/c and HO a/c Actual balance in HO
books
Any Exchange difference arising on the translation of the Branch Trial Balance should be
transferred to Profit & Loss a/c of HO.
(B) Non-integral foreign branch:
(i) Balance Sheet items i.e. Assets and Liabilites both Monetary and Non
monetary apply Closing exchange rate.
(ii) Items of Income and Expenses – At the actual exchange rates on the date
of transactions. However, AS 11 allows average rate subject to materiality.
(iii) Any Exchange rate difference should be accumulated in a ―foreign
currenc y translation reserve‖.
DIFFERENCES BETWEEN AS 11 and IND AS 21
BASIS AS 11 IND AS 21
Exchange diff. arising on
translation of LTFCMI
AS 11, Gives an option to
recognize exchange diff.
arising on translation of
certain LTFCMI from
foreign currency to
reporting currency directly
to equity (FCMIT Diff
A/c) or if it is related to
acquisition of FA then
exchange diff. can be
recognized as a part of the
cost of the asset.
Ind AS 21 does not apply to
LTFCMI recognized in the
Financial Statements
before beginning of first
Ind AS financial reporting
period as per the previous
GAAP i.e. AS 11.
Such an entity may
continue to apply the
accounting policy so opted
for such LTFCMI as per AS
11
Approach for translation
of Foreign Operation
AS 11 is based on Integral
and Non Integral Foreign
operations approach for
accounting of Foreign
Operation.
Ind AS 21 is based on the
Functional Currency
approach. However, factors
to be considered in
determining an entity‘s
functional currency are
similar to the indicators in
existing AS 11to determine
foreign operations as non-
integral operation.
Presentation Currency There is no such term
defined here.
Ind AS 21 – Presentation
currency can be different
from local currency and it
gives detailed guidance in
this regard.

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 Functional currency is the currency of the primary economic environment in
which the entity operates.
 Presentation currency is the currency in which the financial statements are
presented.
Primary Economic Environment
In Which The Entity Primarily Generates And Expends Cash
Primary Indicators Other Indicators
Currency that mainly
influence SALE PRICE of
goods and services and
Currency of the country
whose competitive
forces and regulations
determine the sale
prices of its goods and
services
Currency that mainly
influence COST –
Labour, Material and
other Cost.