AS 11
This query is : Resolved
29 August 2017
XYZ Ltd. has taken a loan of USD 10,000 on April 1, 2016, for a specific
project at an interest rate of 5% p.a., payable annually. On April 1, 2016,
the exchange rate between the currencies was Rs. 50 per USD. The
exchange rate, as at March 31, 2017, is Rs. 48 per USD. The corresponding
amount could have been borrowed by XYZ Ltd. in local currency at an
interest rate of 11 per cent per annum as on April 1, 2017. What will be the treatment of foreign exchange gain & what amount should be recorded as interest in the books of accounts as interest.
project at an interest rate of 5% p.a., payable annually. On April 1, 2016,
the exchange rate between the currencies was Rs. 50 per USD. The
exchange rate, as at March 31, 2017, is Rs. 48 per USD. The corresponding
amount could have been borrowed by XYZ Ltd. in local currency at an
interest rate of 11 per cent per annum as on April 1, 2017. What will be the treatment of foreign exchange gain & what amount should be recorded as interest in the books of accounts as interest.
29 August 2017
see page 346 in M.P.VijayKumar book on accounting standards ILLUSTRATION GIVEN in AS-16 for the answer
29 August 2017
interest in foreign currency =10000*48*5%=24000
exchange differnce=10000(50-48)=20000
interest in indian currency=1000*50*11%=55000
since the interest differntial between foreign and local borrowing more than exchange difference entire exchange differnce of 20000+24000 is considered as borrowing cost as per AS-16 and there is no exchange differntial to be dealt as per AS-11
exchange differnce=10000(50-48)=20000
interest in indian currency=1000*50*11%=55000
since the interest differntial between foreign and local borrowing more than exchange difference entire exchange differnce of 20000+24000 is considered as borrowing cost as per AS-16 and there is no exchange differntial to be dealt as per AS-11
29 August 2017
Thank u sir for ur reply... But in the above ques inspite of exchange difference *gain* of RS. 20000.. We need to book Rs 54000 as borrowing cost???
29 August 2017
Rs44000 is the Borrowing cost because the difference in interest between foreign and indian currency exceeds the exchange differnce
29 August 2017
Rs44000 is the Borrowing cost because the difference in interest between foreign and indian currency exceeds the exchange difference
31 August 2017
First of all very sorry that I gave a wrong answer since there is exchange gain the entire gains are transfered to p&l and no adjustment to be done on Borrowing costs borrowing cost to be capitalised remains at Rs 24000
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- REGARDING GST ON COMMERICIAL PROPERTY
- Is this income indian or foreign income?
- 15ca /15cb whose income tax login? remitter or nri seller's login?
- GST on export of services and Input Credit
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- TDS U/S. 194NF
- Regarding Documentation & Compliances for Opening of Unit of Pvt Ltd.
- ITC temporary reversal and reclaim
- Applicable TDS rate for sale of property in Nov 2024
- Can we claim ITC of Feb-2024 in the month of November-2024 which was not claimed by oversight
- Payment of bonus act - notice pay recovery
- MIS MATCH OF INVOICE NUMBER
- GST Regis.
- ITC c/f from FY2022-23 to FY2023-24 entered the same in table 8C of GSTR9 of FY 2022-23, in FY23-24
- Late filling fees Demand by gst office
- IGST Credit-Show cause notice issued-confusion
- Short and Excess provision of expenses
- Issue of gst e invoice
- Interchangeable words in accounts
- Adjusted profit/Loss in the case of LLP and Pvt. Ltd.company
Trending Online Classes
CAclubindia
