14 August 2010
One PSU has received FC Loan out of an international agreement for developmental purpose. In the notes to accounts, it said that it had not considered forex diff. in borrowing cost due to non-confirmation of balance by the foreign lender? Is this treatment correct? Interest had been calculated considering day balances?
14 August 2010
The FC loan should have been revalued at the forex rate prevailing at the date of Balance Sheet and accordingly FOREX gain or loss should have been recognised.(AS 11)
The question "Interest had been calculated considering day balances?" is not clear. 6. This Statement(AS 11) does not deal with exchange differences arising from foreign currency borrowings to the extent that they are regarded as an adjustment to interest costs (see paragraph 4(e) of AS 16, Borrowing Costs).
16 August 2010
Dear Jay Resatement of Foriegen curency debt does not depand upone confirmation of lender
FC balance have to be reasted at rate prevaling on balance sheet date
Consequent exchange variation is charged to revnue as per As 11.Excahnge variation to the extent of interest cost is capitalized AS 16 for this purpose pls refer Acounting Sandard Interpreation (ASI)10
CAclubindia
