Ind AS 21 - Determining Functional Currency for a Foreign Branch
Posted Feb 23, 2021
Hosch Ltd is a heavy machinery manufacturing company set up in Germany.
To make trade convenient in India, Hosch Ltd has set up its branch S Ltd. in Chennai and also finances all the expenses incurred by S Ltd.
S Ltd. handles the Indian customers and maintains a warehouse for the goods manufactured by Hosch Ltd. and sold by S Ltd. Entire sales amount generated by S Ltd. is remitted to Hosch Ltd.
The Accountant is perplexed whether the functional currency of S Ltd. will be Euro or Indian Rupee.
(Adapted from Case Summaries by CA Parag Kulkarni)
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