Accounting for Forward Enchange contracts

FEC
80

85
30 FEC
for Hedging the speculation or
Trading
Risk
No fund premium or
Forward Rate disc is calculated
spot rate calculate the Gain loss
230 Fwd Premium IDisc on settlement of contract
Less akin on Bls Date translate the
x contract value FEC to mkt price ofsimilar
Total Loss Gain TX FEC recognise the gain
The gain Loss will be or loss to PIL

deferred over the contract on the datesettlement

of
period equally w
off the gain loss on FEC i e
to PIL value recognised settle
10000 ment value will be
3m Fwd rate 48 recognised to Plk Alc
112 Spot rate 46.1
Fwd Prem 1020 112 4m FEC 1 E81
cont value 10,000 3113 FEC mkt price 1 82.5
3
Total loss 12000 Gain 82.5 81 1.5
Loss pm 1 0
420 Record to PIL
FEI E 8205
Feb mar 04 3115 FEC Mkt price 81.75
4000 2 EX i Loss 82.5 81.75 015
Apr went year Record to Plc immediately
409
 As 19 Accounting for leases

Lease

Finance Lease operating Lease

Financial other than Finance Lease

Arrangement

Finance Lease Transferof Risk Rewards of

ownership to Lessee
Any 1 out 5 condn to be met to be a FinanceLease
of
1 Lease termsubstantially coven life asset
of
2
Tif of ownership at end of Lease term
3 Option to Lessee to buy the asset at a price
lower than FMV
4 modified Asset
5 PV
of MLP substantially6901 covers the initial Fo
of the asset

Accounting for Finance Lease

I In the Books Lessee
of
100 Minimum Lease Payment Bls
RN Lease Payable Guaranteed LeasePayable
xxheasgdn.net
Residual value by the
gpvUhRV
20 Lessee or any third party same values i e
go
Lower
on behalf
of Lessee of
a PV MLP
of or
b the asset
Iv of
 MLP willbe discounted to PV by using IRR Lessor
of the
as the disc rate IRR not available
if will use
IBR
IE 1 Anet taken on Fl
Leased Asset Alc Dr
To Lease Payable Alc
2 L R Paid
Leave Payable Alc Dr
Finance charges Alc Dr
To Bank Alc

II In the Books of Lessor

MLP Lease Rent Receivable Bls
GRV Lease Receivable

future Gross Investment

MLP MARV
in Lease Net Investment
value
in Lease
Net Investment PV of Gross Investment
In Lease
Prof MLP PV
of UGRV

unearned Finance Gross Investment

Income Net Investment

JE D Asset given under FL

Lease Receivable Ale Dr
To Asset Alc
2 Lease Rent Received
Bank Alc Dr
To Lease Receivable Alc
To Finance Income Alc
 At IIR
PV PV
of outflows of Inflows
Fof Ind NAInvestments

FV Prof MLP UG RV
Prof
SI Gross Investment MLP UGRV
800,000 5 160,000 140,000
43002000

Net Investment PV of Gross Investment

of 160000 0.4972
800,000 3.3522
140,000 0 4972
2830,920

uneamed Finance Gross Invt Net Invt

Income 4300,000 2830,920
1461.080

01 In the books
of
5 Square Pvt Ltd
Lessee
cal
of Lease Liability
Lease Liability is the lower of
a Fair value of Asset
or b PVof MLP

Fair value asset 2000.000

of
 PV
Prof MLP Prof Lease Rentals of GRU
625000 2.855 125000 0 5718
1784375 71475
1852,850

i value Lease Liability 1852850

of
operating lease

hessor Lessee
1 Asset will be shown in the 1

Books
of Lessor
2 Lease Rentals received is 2 Lease Rentals Payable
anincome should be are
expenses should be
recognised to PIL on straight recognised to PIL on SLB
line basis or in the pattern
of or in
the pattern
of
benefit if derived
any benefits if any
g 4 Ltd has taken a machine under op Lease
for 34ns details are as
follows1

Year L R Payable Expectedoutput

I 50,000 60,000
2 75,000 40,000
3 125,000 501000
2501000 1501000
How will the LR be accounted in books
of Ytd
201 calm of LR to be charged to PIL
wear output ER Payable L R charged 01s Prepaid
to PIL L R L R
I 60,000 50,000 100.000 50,000
250 6 15
2 40.000 75000 66.667 8333
250 4 15
3 50.000 12500 83,333 41667
5
250 15
150,000 250,000 50.000 50.000

t Rent Ale __ Dr 100,000

To Bank Ale 50.000
To Lease Adjustment Alc 50,000

Sale Lease Back

A Asset sold to B

antiIsd
Profit Loss on sale Asset
of
Depends upon the type of
Lease back
Financelease Any gain loss arising on sale
1
of asset
shall be deferred over the lease term in the same
proportion Dep charged on asset
of
 2 operating Lease

BLEEP
1ˢᵗ compare BV FV
a BV FV NO
Profit No loss
b BV FV Loss recognise immediately to P L
loss
Impairment
50 c BV C FV Gain recognise immediately to P L
43
and compare FV SP
a FV SP No Profit No Loss
b FU SP Loss 2 treatments
a
If loss compensated by future lease
payments below FV defer the Loss
over lease term
b hour not compensated
30 If recognise
toPIL immediately
60 c FV CSP Gain Abnormal defer over the
Lease term

1 BV FV SP
g
40 43 45
E Thain defer over lease term

EI.fi hain defer over lease term

If.si wn neber
PILimmediately
 Encess Dep as per I T Rules 600,000
namortised Preliminary Enp
as per I T 10,000
Net Timing Difference 59010
DTL to be 590,000 30
recognise 172.00

I Alc I T
near I 2 3 Year I 2 3
PBDT 500 500 500 PBDT 500 50 500
80 80 80 240
Dep Iep
PBT 420 420 420 PBT 260 500 500
Prov 104 90 75 E Tan 104 190 175
DTL 16008 PAT 156 310 3225
G Reverse 32 8 28
PAT 255.2 262.8 273
2 2 2

years
Teep as per I T 240
80
Dep as per Alc
T D arise Io
DTL to be recognised 1604 38 62280

IE P L Alc Dr 164.8
To Prov
for tan All 104
TO DTL Alc 60.8
 38
60.8
160
1
35 560
heard
Dep as per I T Nil
Dep as per Alc 1802
T D Reverse So

Reversal DTL
of
a
changes in Take
wir't 160 31 4 80
rate from 38 to 35
b For Dep TD Reversal 80 351 28
32 80
P Alc 157.8
IE L Dr
DTL Alc Dr 32 80
To Prov for Tan Alc 190

near
Dep as per I T Nil
Dep as per Alc 1802
T D Reverse So

i Reversal
of DTL So 35 28

P Alc
IE L Dr 147
DTL Alc Dr 28
To Prov for Tan Alc 175

501 Tan Emp 1500,000 20 300,000

Normal IT 250,000 201 50,000
MAT 750,000 7.51 56,250
MAT Normal IT
pay MAT
 i Encess MAT over IT 56250 50000
of
6250

TE CT DT 20
1250,000
300,000 50,000 DTL
i DTL 300,000 50,000 250,000
250,000

Tan Erp to be Prov for Tan DR Encess

Do to PIL of MAT
50 000 250,000 6250
306,250