Bank of baroda

BANK OF BARODA
Subject
Indian GAAP
US GAAP
Off-balance sheet items
ICAI has recently announced disclosures regarding
derivative instruments viz. Category-wise quantitative
data, the purpose viz. Hedging or speculation, the
foreign currency exposures those are not hedged
by a derivative instrument or otherwise.
AS 29 requires detailed disclosure of material
contingent liabilities.
SEC registrants are required to provide extensive
disclosures of material off-balance sheet items,
contingent liabilities and financial guarantees.
Commitments and contingencies are required to be
disclosed.
Fair values of financial
instruments
There is no requirement to disclose the fair value of
financial instruments.
Extensive disclosures are required of the fair values
of financial instruments and the methodologies or
determining fair values.
for hedging purposes. For forward contracts entered
into for any other purpose, mark to market of
outstanding contracts is required at valuation date.
RBI Guidelines on Forward Rate Agreements /
Interest Rate Swaps requires the transactions to be
classified into hedging and trading. The swap that is
accounted for like a hedge should be accounted for
on accrual basis except the swap designated with
an asset or liability that is carried at market value or
lower of cost or market value in the financial
statements. In that case the swap should be marked
to market with the resulting gain or loss recorded
as an adjustment to the market value of designated
asset or liability. Gains or losses on the termination
of swaps should be recognised when the offsetting
gain or loss is recognised on the designated asset
or liability. This implies that any gain or loss on the
terminated swap would be deferred and recognised
over the shorter of the remaining contractual life of
the swap or the remaining life of the asset/ liability.
Trading swaps should be marked to market with
changes recorded in the income statement. Income
and expenses relating to these swaps should be
recognised on the settlement date. Gains or losses
on the termination of trading swaps should be
recorded as immediate expense or income.
Gains and losses on fair value hedges, for both
the hedging instrument and the item being hedged,
are recognised in the income statement.
Gain and losses on effective portion of cash flow
hedges is initially reported as a component of other
comprehensive and subsequently reclassified in to
earnings when the forecasted transaction affects
earnings.
In case of hedging the foreign currency exposure
of a net investment in a foreign operation, the same
accounting treatment is given as in the case of
Cash flow hedge.
The gains or losses on the ineffective portion of
any hedge are written off as income or expense.
Derivatives that are not designated as a hedging
instrument, the gain or losses is recognised in
earnings in the period of change.

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