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As- 11. very urgent

Prakash Mali (Artical Assistant) (166 Points)

12 April 2012

X Ltd(Indian Company) having a foreign subsidiary company at Singapore. It has given loan of $20,00,000 to its subsidiary company. Shd it be considered as Moneratary Items? whether is to be converted as per exchange rate as on 31-03-2012?

What is the treatment should be done at yr ending FY 2011-12? (Dollars' Spot Rate = RS. 44 and initial recognition done at the same rate)

Pl opine on it.

Thanks in Advances.

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2 Replies

CA Sachin Rastogi (Audit/IFRS Manager) (338 Points)
Replied 12 April 2012

Yes, it is a monetary asset and needs to be revalued at 31-3-2011 in X limited standalone books and exchange difference on this revaluation should be booked in income statement.

On consolidation with Singaporean subsidiary the loan balance will be eliminated.

Let me know if you have any other querries.

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Prakash Mali (Artical Assistant) (166 Points)
Replied 12 April 2012

Originally posted by : CA Sachin Rastogi
	Yes, it is a monetary asset and needs to be revalued at 31-3-2011 in X limited standalone books and exchange difference on this revaluation should be booked in income statement. On consolidation with Singaporean subsidiary the loan balance will be eliminated. Let me know if you have any other querries.

But Sir,

what will be taxation Impact - $ rate at yr ending is approx Rs. 50 and it purchase it at Rs. 44.

Now my gain due to exchage difference will be 6* $ 2000000. Does it fair to pay Tax on non-cash income of Rs. 1,20,00,000. My income Tax due to above will be Aprrox. 36.72 lacs. Is there any benefit if dallar rate come down to Rs. 40.