IRFC FINAL - Indian Railway Finance Corporation Ltd.

monetary assets and liabilities at rates different from those at which they were initially recordedduring the year, or reported in previous financial statements, other than the exchange differences ontranslation of foreign currency loans and interest thereon recoverable separately from the lessee underthe lease agreements, are transferred to a 'Foreign Currency Monetary Item Translation DifferenceAccount' in terms of the notification no. F. No. 17/33/2008/CL-V dated 31 st March 2009 issued bythe Government of India, Ministry of Corporate Affairs in modification of AS-11.iii) In respect of forward exchange contracts, the difference between the forward rate and exchange rateon the date of transaction are recognised as income or expenses over the life of the contract.4. InvestmentsInvestments are classified into long term investments and current investments based on intent of managementat the time of making the investment. Investments intended to be held for more than one year, are classifiedas long-term investments.Current investments are valued at lower of cost or market value. Long-term investments are valued at costunless there is depreciation, other than temporary, in their value.5. Leased AssetsLease arrangements where the risks and rewards incidental to ownership of an asset substantially vest withthe lessee , are recognised as financial leases and are shown as Receivable in the Balance Sheet at anamount equal to the net investment in the lease, in accordance with Accounting Standard-19 'Leases' issuedby the Institute of Chartered Accountants of India.6. Fixed AssetsFixed assets are stated at cost, less accumulated depreciation. Costs include all expenses incurred to bringthe assets to their present location and condition.Depreciation on fixed assets is charged on straight line method at the rates prescribed in Schedule XIV tothe Companies Act, 1956, on pro-rata basis.7. (a) Securitisation of Lease ReceivablesLease Receivables securitised out to Special Purpose Vehicle in a securitisation transaction arede-recognised in the balance sheet when they are transferred and consideration has been received bythe Company. In terms of the guidelines on Securitisation of Standard Assets issued by the Reserve Bankof India vide their circular no.DBOD.No.B.P.BC.60/21.04.048/2005-06 dated 1 st February 2006, theCompany amortises any profit arising from the securitisation over the life of the Pass Through Certificates(PTCs) / Securities issued by the Special Purpose Vehicle (SPV). Loss, if any, is recognised immediatelyin the Profit & Loss Account.(b) Assignment of Lease ReceivablesLease Receivables assigned through direct assignment route are de-recognised in the balance sheetwhen they are transferred and consideration has been received by the Company. Profit or loss resultingfrom such assignment is accounted for in the year of transaction.8. Bond Issue Expenses and Expenses on Loans, Leases and Securitisation Transactiona) Bond Issue expenses including management fee on issue of bonds (except discount on deep discountbonds) incurred during the year are charged to Profit and Loss Account. Upfront discount on deepdiscount bonds is amortised over the tenor of the bonds.b) Documentation, processing & other charges paid on Long Term Loans are charged to the Profit & LossAccount in the year loan is sanctioned / availed.c) Incidental expenses incurred in connection with the Securitisation transaction executed during the yearare charged to the Profit and Loss Account.9. Taxes on IncomeTax expense comprises of Current Tax, Deferred Tax and Fringe Benefit Tax.47