India gaap reporting (functional currency is not inr)

Hello Team

There is a wholly owned subsidairy ABC Ltd of a US company in INDIA. It basically buys in USD and sells finished goods in USD to parent company. Hence its functionaly currency is USD. It does have few transactions in INR as well.

For Indian Statutory reporting as per INDIA GAAP, have couple of queries:

In the Month/Year end, does ABC Ltd need to report in USD or INR or both?

If it has to report in INR, how does the USD balance sheet items need to reflect. Example, If ABC Ltd has Receivables in USD, since the functional currency is USD, as such ABC Ltd doesnt revaluate. But for INDIA reporting does it need to re-evaluate the corresponding INR amounts with the latest rates USD/INR rates? 

Thanks

Kishore

 

Replies (1)

Hi!

From your question, I understand that ABC Ltd is a company incorporated in India which is a wholly owned subsidiary of a foreign company. Hence this doesn't fall under the definition of foreign company u/s 2(42) and thereby Chapter XXII of Companies Act, 2013 is not applicable.

All the provisions of Companies Act are applicable to this and yes, Financial statements must be prepared in Rs. and filed with ROC. Though USD balance sheet is not required by Indian laws, it has to be prepared, as the foreign holding company would need it for consolidation.

Regarding your query on rates applicable, I would strongly recommend you to thoroughly  go through AS11 or IndAS21 whichever is applicable.

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