11 July 2012
If company has issue Foreign Currency Convertible Bond then what is the accounting entry for that n weather we have to treat it as mark to market at the end of the year???If yes that its called foreign currency fluctuation Dr in P&L account??? expert pl help
12 July 2012
thanxs sir but what is the meaning of mark to market only for the forex part we dont have to book any currency fluctuation in that??? n what is the accounting entry in both the case under GAAP & under AS-30
12 July 2012
yes, book only currency flutuation on full dollar value juts like any other foreign currency liability.
Under Ind AS 39, the conversion option is considered is considered equity in nature and thus would require accounting as Compound Instrument. ie Split Debt and Equity and then MTM only debt portion for forex fluctuation.
Under AS 30 & IAS 39, the conversion option being in INR and bond issued in dollar, is NOT considered equity but an embedded derivative. It is thus fair valued at every balance sheet date. This Fair value adjustment will inlcude imapct of current equity prices as well as currency exchange of the instrument. Refer Sterlite balance sheet which has applied AS 30 is its financial statements.
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