Institute of Chartered Financial Analysts of India (ICFAI) University 2006 Certification Finance International and Trade – I - university paper

TEMPORAL METHOD

This method classifies items on the basis of whether they are valued at historical basis or on market price basis. All the items of the balance sheet that are valued on historical cost basis are translated at the historical rate, and those which are valued on current value (or realizable value) are valued at the closing rate. Effectively, this method is a modification of the monetary/non-monetary method, as the monetary assets and liabilities get converted at the closing rate, with the non-monetary items getting converted at the historical cost. The modification lies in the fact that under the temporal method, the inventory gets converted at the closing rate despite being a non-monetary item, if it is valued in the balance sheet at the realizable value. Under this method, the income statement items are also translated in the identical way as under the monetary/ non-monetary method.

CURRENT RATE METHOD

Under this method, all assets, liabilities, incomes and expenditures are translated at the current or closing rate. The idea is to retain the relationship (ratios) ranging from different items of the balance sheet and income statement.
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7.
FOREIGN TRADE POLICY 2004-2009

For India to become a major player in world trade, an all encompassing , comprehensive views need to be taken for the overall development of the country’s foreign trade. While increase in exports is of vital importance, we have also to facilitate those imports, which are needed to stimulate our economy. Coherence and consistency among trade and other economic policies is important for maximizing the contribution of such policies to development. Thus, while incorporating the existing practice of enunciating an annual trade policy, it is necessary to go much beyond and take an integrated approach to the developmental requirements of India’s foreign trade.

The principal objectives of the foreign trade policy are:

i. To double our percentage share of global merchandise trade with in the next 5 years.

ii. To stimulate sustained economic growth by providing access to essential raw materials, intermediates, components, consumables and capital goods needed for augmenting production and providing services.

iii. To enhance the technological strength and efficiency of Indian agriculture, industry and services, thereby improving their competitive strength while generating new employment opportunities and to encourage the attainment of internationally accepted standards of quality.

Earning:   Approval pending.