Hi All,
This query is regarding the calculation of Forex Gain/Loss for partial repayment of Cross Currency Loans. First the 'Factor' is calculated by dividing the Installment amount by the Total Loan Amount. Then the repayment (of installment) in foreign currency is translated into home currency using the Factor calculated earlier.
Although I understand the logic, I would like to know what is the basis of this calculation? Is it a Best Practise or is it based upon some GAAP?
Best,
Rohit