Dear All,
Your guidance is required for the following issue.
Company has received some funds in foreign currency from its Parent company . A portion of the same was booked under the head “secured loan” and another portion as “Advance against sharecapital”. When we are restating the foreign currency liability is there any need to restate the portion shown as Advance against sharecapital? IAS21 does’nt give a clear picture for the same. Kindly guide me.
Thanks
Anupam
Dear Anupam,
Advance against sharecapital is a non-financial liability (i.e there is no obligation to deliver cash) and thus, need not be restated as at the year end.
Regards,
Rama
Dear Anupam,
In the first place I would endorse the response given by Rama. But I would like to go further to explain the concept. IAS 21 distincts exchange rate revaluation treatment between monetory and non monetory items, i.e items (assets as well as liabilities) for which ultimate settlement is required to be through delivery/receipt of cash are revalued at reporting date with changes taken to SOCI previously P/L. Therefore advance in respect of future issue of shares need not be revalued.
Regards,
Zohaib.