IRFC COVER-final - Indian Railway Finance Corporation Ltd.

than the exchange differences on translation of foreign currency loans and interest thereon recoverable separately from thelessee under the lease agreements, are transferred to a 'Foreign Currency Monetary Item Translation Difference Account' interms of the notification no. F. No. 17/33/2008/CL-V dated 31st March 2009 issued by the Govt. of India, Ministry of CorporateAffairs in modification of AS-11.iii)In respect of forward exchange contracts, the difference between the forward rate and exchange rate on the date of transactionare 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 Management at the time of making theinvestment. Investments intended to be held for more than one year, are classified as long-term investments.Current investments are valued at the lower of the cost or the market value. Long-term investments are valued at cost unless there isdepreciation, other than temporary, in their value.5) Leased AssetsLease arrangements where the risks and rewards incidental to ownership of an asset substantially vest with the lessee, are recognised asfinancial leases and are shown as Receivable in the Balance Sheet at an amount equal to the net investment in the lease, in accordancewith Accounting Standard -19 'Leases' issued by the Institute of Chartered Accountants of India.6) Fixed AssetsFixed assets are stated at cost, less accumulated depreciation. Cost include all expenses incurred to bring the assets to their presentlocation and condition.Depreciation on fixed assets is charged on straight line method at the rates prescribed in Schedule XIV to the Companies Act, 1956, on proratabasis.7) (a) Securitisation of Lease ReceivablesLease Receivables securitised out to Special Purpose Vehicle in a securitisation transaction are de-recognised in the balance sheetwhen they are transferred and consideration has been received by the Company. In terms of the guidelines on Securitisation ofStandard Assets issued by the Reserve Bank of India vide their circular no.DBOD.No.B.P.BC.60/21.04.048/2005-06 dated 1st February2006, the Company 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 immediately in the Profit & Loss Account.(b)Assignment of Lease ReceivablesLease Receivables assigned through direct assignment route are de-recognised in the balance sheet when they are transferred andconsideration has been received by the Company. Profit or loss resulting from such assignment is accounted for in the year oftransaction.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 discount bonds) incurred during theyear are charged to Profit and Loss Account. Upfront discount on deep discount bonds is amortised over the tenor of the bonds.b) Documentation, processing & other charges paid on Long Term Loans are charged to the Profit & Loss Account in the year loan issanctioned / availed.c) Incidental expenses incurred in connection with the Securitisation transaction executed during the year are charged to the Profit andLoss Account.9) Taxes on IncomeTax expense comprises of Current Tax and Deferred Tax.Provision for current income tax is made in accordance with the provisions of the Income Tax Act, 1961.Deferred tax expense or benefit is recognised on timing differences, being the difference between taxable incomes and accounting income,that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax assets and liabilities are measuredusing the tax rates and tax laws that have been enacted or substantively enacted by balance sheet date.49