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CA Intermediate · Advanced Accounting · Accounting for Branches including Foreign Branches

Delhi Ltd's integral foreign branch had these items in FC: Fixed assets bought on 1 April at FC 10,000 (rate Rs 60), debtors FC 4,000, and creditors FC 2,500. Closing rate is Rs 64. Under AS 11 for an integral operation, what is the net rupee value of debtors less creditors on translation?

The net amount is Rs 96,000. For an integral foreign branch, monetary items such as debtors and creditors are translated at the closing rate of Rs 64. Net FC 1,500 multiplied by 64 gives Rs 96,000.

  1. ARs 96,000Correct
  2. BRs 1,00,000
  3. CRs 90,000
  4. DRs 1,60,000

Explanation

Monetary items are translated at the closing rate. Net monetary items = FC 4,000 - FC 2,500 = FC 1,500. FC 1,500 x Rs 64 = Rs 96,000. Using the Rs 60 rate would give Rs 90,000, which is the wrong rate.

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