06 August 2010
Borrowings under ECB is credited in USD to our overseas bank. Upon crediting the money in USD, an entry is created in our books at notional rate for creation of the loan liability. Subsequently, the funds are credited to our ECB (rupee account) in India at the the rate prevailing on the date of transfer. Upon transfer, the loan liability is restated at the converted rate. The difference between the notional exchange rate and the actual converted rate is treated as restatement of the loan liability and not as exchange differnece. Is this accounting treatment correct?
10 August 2010
According to me this treatment is not correct. It should be transferred to fluctuation a/c. For further details go through Accounting Standard 11.e
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