CA Inter P1 · Chapter 13 · Question 6 of 10
Case: The integral foreign branch of Qadir Ltd holds machinery costing USD 50,000, acquired when the rate was ₹70 per USD. Depreciation is charged at 10% on cost. The closing rate is ₹83 and the average rate for the year is ₹78. The depreciation to be shown in the translated branch statement of profit and loss is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) ₹3,50,000
Explanation
Depreciation in USD = 50,000 x 10% = 5,000. For an integral foreign operation, depreciation is translated at the same historical rate used for the related asset: 5,000 x ₹70 = ₹3,50,000. The closing rate is for monetary items and the average rate for other revenue items.
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