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TMI BlogCompanies (Indian Accounting Standards) Amendment Rules, 2025X X X X Extracts X X X X X X X X Extracts X X X X ..... thin a time frame that allows for a normal administrative delay and through a market or exchange mechanism in which an exchange transaction would create enforceable rights and obligations." (ii) after paragraph 8, the following paragraphs shall be inserted, namely: - "Elaboration on the definitions Exchangeable (paragraphs A2-A10) 8A An entity assesses whether a currency is exchangeable into another currency: (a) at a measurement date; and (b) for a specified purpose. 8B If an entity is able to obtain no more than an insignificant amount of the other currency at the measurement date for the specified purpose, the currency is not exchangeable into the other currency." (iii) after paragraph 19, the following paragraph shall be inserted, namely: - "Estimating the spot exchange rate when a currency is not exchangeable (paragraphs A11-A17) "19A An entity shall estimate the spot exchange rate at a measurement date when a currency is not exchangeable into another currency (as described in paragraphs 8, 8A-8B and A2-A10) at that date. An entity's objective in estimating the spot exchange rate is to reflect the rate at which an orderly exchange transaction would take pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at that date; and ii. recognise any effect of initially applying the amendments as an adjustment to the opening balance of retained earnings. (b) when the entity uses a presentation currency other than its functional currency, or translates the results and financial position of a foreign operation, and, at the date of initial application, concludes that its functional currency (or the foreign operation's functional currency) is not exchangeable into its presentation currency or, if applicable, concludes that its presentation currency is not exchangeable into its functional currency (or the foreign operation's functional currency), the entity shall, at the date of initial application: i. translate affected assets and liabilities using the estimated spot exchange rate at that date; ii. translate affected equity items using the estimated spot exchange rate at that date if the entity's functional currency is hyperinflationary; and iii. recognise any effect of initially applying the amendments as an adjustment to the cumulative amount of translation differences-accumulated in a separate component of equity." (vii) for Appendix 'A' and entries relating thereto, the followin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and obligations. Enforceability is a matter of law. Whether an exchange transaction in a market or exchange mechanism would create enforceable rights and obligations depends on facts and circumstances. Purpose of obtaining the other currency A6 Different exchange rates might be available for different uses of a currency. For example, a jurisdiction facing pressure on its balance of payments might wish to deter capital remittances (such as dividend payments) to other jurisdictions but encourage imports of specific goods from those jurisdictions. In such circumstances, the relevant authorities might: (a) set a preferential exchange rate for imports of those goods and a 'penalty' exchange rate for capital remittances to other jurisdictions, thus resulting in different exchange rates applying to different exchange transactions; or (b) make the other currency available only to pay for imports of those goods and not for capital remittances to other jurisdictions. A7 Accordingly, whether a currency is exchangeable into another currency could depend on the purpose for which the entity obtains (or hypothetically might need to obtain) the other currency. In assessing exchangeabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s denominated in FC. Step II: Estimating the spot exchange rate when a currency is not exchangeable (paragraph 19A) A11 This Standard does not specify how an entity estimates the spot exchange rate to meet the objective in paragraph 19A. An entity can use an observable exchange rate without adjustment (see paragraphs A12-A16) or another estimation technique (see paragraph A17). Using an observable exchange rate without adjustment A12 In estimating the spot exchange rate as required by paragraph 19A, an entity may use an observable exchange rate without adjustment if that observable exchange rate meets the objective in paragraph 19A. Examples of an observable exchange rate include: (a) a spot exchange rate for a purpose other than that for which an entity assesses exchangeability (see paragraphs A13-A14); and (b) the first exchange rate at which an entity is able to obtain the other currency for the specified purpose after exchangeability of the currency is restored (first subsequent exchange rate) (see paragraphs A15-A16). Using an observable exchange rate for another purpose A13 A currency that is not exchangeable into another currency for one purpose might be exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rter this period, the more likely the first subsequent exchange rate will reflect the prevailing economic conditions. (b) inflation rates-when an economy is subject to high inflation, including when an economy is hyperinflationary (as specified in Ind AS 29, Financial Reporting in Hyperinflationary Economies), prices often change quickly, perhaps several times a day. Accordingly, the first subsequent exchange rate for a currency of such an economy might not reflect the prevailing economic conditions. Using another estimation technique A17 An entity using another estimation technique may use any observable exchange rate- including rates from exchange transactions in markets or exchange mechanisms that do not create enforceable rights and obligations-and adjust that rate, as necessary, to meet the objective in paragraph 19A. Disclosure when a currency is not exchangeable A18 An entity shall consider how much detail is necessary to satisfy the disclosure objective in paragraph 57A. An entity shall disclose the information specified in paragraphs A19-A20 and any additional information necessary to meet the disclosure objective in paragraph 57A. A19 In applying paragraph 57A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AS 21 to draw attention to guidance material already available in other Ind ASs, which is also relevant to the topic in Ind AS 21." (B) in "Indian Accounting Standard (Ind AS) 101", - (i) for paragraph 31C, the following paragraph shall be substituted, namely: - "31C If an entity elects to measure assets and liabilities at fair value and to use that fair value as the deemed cost in its opening Ind AS Balance Sheet because of severe hyperinflation (see paragraphs D26-D30), the entity's first Ind AS financial statements shall disclose an explanation of how, and why, the entity had, and then ceased to have, a functional currency that is subject to severe hyperinflation." (ii) after paragraph 39AH, the following paragraph shall be inserted, namely: - "39AI Lack of Exchangeability (Amendments to Ind AS 21), amended paragraphs 31C and D27. An entity shall apply those amendments when it applies the amendments to Ind AS 21." (iii) in Appendix D, in paragraph D27, for point (b), the following paragraph shall be substituted, namely: - "(b) the currency is not exchangeable into a relatively stable foreign currency. Exchangeability is assessed in accordance with Ind AS 21." [F. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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