Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

ICDS VI : Effects of Changes in Foreign Exchange Rates

Income Tax - Income computation and disclosure standards - 07 - This ICDS corresponds to Accounting Standard (AS) 11 - The Effects of Changes in Foreign Exchange Rates of the Companies (Accounting Standards) Rules, 2006 and Indian Accounting Standard (Ind AS) 21 - The Effects of changes in foreign exchange rates, prescribed under section 133 of the Companies Act, 2013 as notified under the Companies (Indian Accounting Standards) Rules, 2015. 1. Scope:- This Income Computation and Disclosure Stan .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

erally, reporting currency would be the Indian currency and accordingly, foreign currency would generally mean currency other than the Indian currency. Forward exchange contract as defined under this ICDS means an agreement to exchange different currencies at a forward rate, which is also the definition of this term under AS 11. However, the definition under this ICDS also specifically includes a foreign currency option contract or another financial instrument of a similar nature. 2. Foreign Cur .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the exchange rate fluctuates significantly. 3. Conversion at Last Date of Previous Year:- At last day of each previous year:- (a) ICDS prescribes recording of monetary items at the end of the year by applying closing rate. Since the treatment is the same under ICDS as well as the Accounting Standards, difference would not arise and consequently, no adjustment would be required in computing the income. (b) Clause (b) provides an exception to Clause (a) to the effect that if closing rate is unreal .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

inventory carried at net realisable value (NRV). It prescribes conversion of these nonmonetary items at the exchange rate at the date of transaction. (d) non-monetary item being inventory which is carried at net realisable value denominated in a foreign currency shall be reported using the exchange rate that existed when such value was determined. 4. Recognition of Exchange Differences:- (i) In respect of monetary items, exchange differences arising on the settlement thereof or on conversion the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ce life of the asset. In case of long term foreign currency monetary items for acquisition of other assets, the entity can exercise an irrevocable option, i.e. to accumulate the exchange difference in foreign currency monetary item translation reserve account to be amortized over the balance period of such long-term asset or liability. (ii) In respect of non-monetary items, exchange differences arising on conversion thereof at the last day of the previous year shall not be recognised as income o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f there exists an unpaid foreign currency liability towards the cost of an asset or for repayment of moneys borrowed for the purpose of acquiring such asset, then the exchange difference i.e. increase or decrease in the liability as expressed in Indian currency would entail a corresponding increase or decrease in the actual cost of the asset as defined in section 43(1) of the Act in the year of payment. 6. Financial Statements of Foreign Operations:- The financial statements of a foreign operati .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

premium or discount that arise at the inception of a forward exchange contract and exchange difference on such a contract. The premium or discount that arises on the contract is measured by the difference between the exchange rate at the date of the inception of the contract and the forward rate specified in the contract. For example, if a forward exchange contract is entered in respect of an obligation to pay a vendor in foreign currency after 2 months and the prevailing foreign exchange rate a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

claimed as an expense, pro-rated over 2 months, being the period of forward exchange contract and the exchange difference of ₹ 0.90 with a corresponding exchange gain on forward contract of ₹ 0.90 is to be recognised as income and expense at the end of the said period. Notes:- This treatment of income or expense arising on account of premium, discount or exchange difference does not apply to contracts that are intended for trading or speculation purposes. These provisions also do not .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version