Reg. buyback of FCCBs

Nehal (Querist) 13 July 2009 This query is : Resolved
In case a Company buys back its Foreign Currency Convertible bonds at a discount to its face value, what is the accounting treatment, i.e. whether it is a capital gain or an income to be credited to P&L Account? If anyone has the accounts of any such transaction of a company, please provide that also or any such refrence material on nsnehalshah@gmail.com.

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Omkar (Expert) 14 July 2009
I think it is to be treated as gain to P & L account over years

Anant Vats (Expert) 14 July 2009
This is a transaction of captital nature, so whatever is the income or loss in buyback of share is a capital income or expenditure. So the whole of it cannot be charged to the profit and loss of one year it has to be amortised over the years.

Nehal (Querist) 14 July 2009
Thanks for the replies but I request you all to even give an example of a Company which has adopted this practice so that I have a practical solution to decide the treatment to be given.

Nehal

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