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Reinstatement of Foreign Currency

jayanthy (student) (25 Points)

02 July 2009

Whether Foreign Currency reinstatement is applicable for Loan received in Dollars & then converted to INR,,,,,,,,,,,

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RAMANJU (here to updating the knowledge) (485 Points)
Replied 02 July 2009

If the conversion is taken place as on Balance sheet date, the same INR amount can be considered in Balance sheet. OR if the loan received on any other date and accordingly convered into INR and the unpaid loan is outstanding as on BAlance Sheet date then amount should be converted into INR by taking the rate prevailing as on Balance Sheet date. The amount resulted in difference in foreign exchange rates will be routed through Profit and Loss Account if the loan is not for fixed assets. In the case the loan is for Fixed assets, the difference can be adjusted against carrying value of fixed assets ( As per recent notification by Govt.)

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Anshika ( CA -Industry- Sr.Accounts Officier) (141 Points)
Replied 21 December 2009

yes. loan amount should be reinsated to know the true value if debt , and gain or loss on conversion should be taken in P/L a/c

First!!!! (student) (162 Points)
Replied 26 December 2009

Yes the loan should be reinstated as Per AS11 and the effetcs must be dr or credited in the P&L A/C. . .It is better to reinstate the loan on a monthly basis than on a yearly basis.So that the currency fluctuation doesnot show a huge amount of difference