Economics · Accounting Standards
Global Bharat Bank (GBB), a major Indian bank with branches in 15 countries, is finalizing its accounts. The bank has several subsidiaries, including an insurance arm. GBB wants to use a historical exchange rate under AS 11 to defer recognizing losses from a defaulted loan given to a foreign company. The bank also has significant internally generated software assets. Based on Indian Accounting Standards, which of the following statements is true?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Software developed in-house cannot be recognized as an asset under any circumstances.
- 2GBB does not need to consolidate its subsidiaries if they operate in different industries like insurance.
- 3GBB must translate the foreign loan at the current closing exchange rate as of the balance sheet date and recognize the loss in the P&L account.✓
- 4GBB can use the historical exchange rate for the defaulted foreign loan as per AS 11.
Correct answer
GBB must translate the foreign loan at the current closing exchange rate as of the balance sheet date and recognize the loss in the P&L account.
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