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105
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES
(contd)
of historical cost denominated in a foreign currency are reported using the exchange rate at the date
of the transaction.
c) Exchange differences:
All exchange differences arising on settlement and conversion of foreign currency transactions are
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under paragraph 46A of Accounting Standard-11 ‘The effects of changes in foreign exchange rates’
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Consequently, foreign exchange difference on account of long-term foreign currency borrowings
utilised to acquire a depreciable asset, is adjusted in the cost of the depreciable asset, which will be
depreciated over the balance life of the asset.
d) Forward exchange contracts not intended for trading or speculation purposes:
The premium or discount arising at the inception of forward exchange contracts intended to hedge
existing exposures is amortised as expenses or income over the life of the contract. Exchange
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income or expense for the year.
e) Derivatives:
Where the Company has entered into derivative contracts such as Interest Rate Swaps, Currency
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instruments are initially measured at fair value, and are remeasured at subsequent reporting dates.
The revalorisation gain or loss on Mark-to-Market (MTM) is generally recognised in the Statement of
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losses on instruments intended to hedge long-term foreign currency borrowings utilised to acquire
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term foreign currency borrowings.
f) Changes in fair value of derivative instruments intended to hedge future exposures resulting out of
‘highly probable forecast transactions’ such as exports, is determined as effective hedges of future
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Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated, or
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cumulative gain or loss on the hedging instrument recognised in shareholders’ funds is retained there
until the forecasted transaction occurs. If a hedged transaction is no longer expected to occur, the
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and Loss for the period.
4.10 Revenue Recognition:
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that will be derived from the sale of goods.
a) Sale of Goods and Services:
i) Domestic sales are accounted for on dispatch from the point of sale.
ii) Export sales are accounted on the basis of dates of on board Bill of Lading and | or Air Way Bill.
Notes
to Consolidated financial statements