Changes in Foreign Exchange Rates

This query is : Resolved

sandeep kansal (Querist)
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05 August 2007 Hi Friends,
This is Sandeep Kansal From Maler-kotla (Pb.)

My Query is as followed :-
Suppose if any person takes a term loan @ 8% interst.He got a offer from the lender to convert his loan in foreign currency and he have to pay interst @ 4%. Then he wants to convert it in foreign currency to avail the profit in saving of 4% interst. so what is the treatment of difference of change in foreign currency rate at the time of last payment. So this How should this Profit\Loss treated in Accounts.

D.C AHUJA

D.C AHUJA (Expert)
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07 August 2007 FIRST IT WILL DEPEND ON THE FACT THAT FOR WHAT YOU TOOK LOAN.IF IT WAS FOR BUSINESS PURPOSE THAN YOU ARE ENTITLED TO CLAIM INTEREST PAYMENT AND FURTHER IF YOU CAN PROOF THAT YOU MADE TRANACTIONS FOR SAVING INTERET THAT YOU CAN CLAIM THE SAME.