ICICI Bank 2005 Annual Report Download - page 113

F53
c) In case of Prudential ICICI Asset Management Company Limited, fixed assets other than leasehold improvements
and software development and licensing costs are depreciated at written down value method based on economic
lives of the assets as estimated by the management.
d) In case of ICICI Bank Canada and ICICI Bank UK Limited, fixed assets other than leasehold improvements are
depreciated using straight-line method over the estimated useful lives of the assets as estimated by the
management.
e) In case of ICICI Prudential Life Insurance Company Limited, assets costing upto Rs. 20,000 (Rupees twenty
thousand) are fully depreciated in the year of acquisition. Intangible assets comprising of software are stated at
cost less amortization. Significant improvements to software are capitalized with the insignificant improvements
being charged off as software expenses. Software expenses are amortized on Straight Line Method over a period
of 3 years from the date of put to use, being the Management's estimate of the useful life of such intangibles.
f) In case of ICICI Lombard General Insurance Company Limited, software costing less than Rs. 500,000 was fully
written off in the year of acquisition. However software acquired on or after April 1,2004 and costing less than
Rs. 500,000 are depreciated @ 20 percent.
6. Foreign currency transactions
ICICI Bank Limited
a) Foreign currency income and expenditure items of domestic operations are translated at the exchange rates
prevailing on the date of the transaction, income and expenditure items of integral foreign operations
(representative offices) are translated at weekly average closing rate, and income and expenditure of non integral
foreign operations (foreign branches and off-shore banking units) are translated at quarterly average closing rate.
b) Monetary foreign currency assets and liabilities of domestic and integral foreign operations are translated at
closing exchange rates notified by Foreign Exchange Dealers' Association of India ("FEDAI") at the balance sheet
date and the resulting profits/losses are included in the profit and loss account.
c) Both monetary and non-monetary foreign currency assets and liabilities of non integral foreign operations are
translated at closing exchange rates notified by FEDAI at the balance sheet date and the resulting profits/losses
exchange differences are accumulated in the foreign currency translation reserve until the disposal of the net
investment in the non integral foreign operations.
d) Outstanding forward exchange contracts are stated at contracted rates and are revalued at the exchange rates
notified by FEDAI for specified maturities and at interpolated rates for contracts of in-between maturities. The
resultant gains or losses are recognised in the profit and loss account.
e) Contingent liabilities on account of guarantees, endorsements and other obligations are stated at the exchange
rates notified by FEDAI at the balance sheet date.
Other entities
The financial statements of foreign subsidiaries/associates - ICICI Securities Holdings Inc., ICICI Securities Inc., ICICI
Bank UK Limited, ICICI Bank Canada, ICICI International Limited and TCW/ICICI Investment Partners LLC have been
converted in accordance with Accounting Standard 11 on "The effects of changes in foreign exchange rates".
In translating the financial statements of the above-mentioned non-integral foreign operations, all monetary items
have been translated at the rate prevailing at the balance sheet date. All Profit and Loss items have been translated
at the average rate prevailing during the financial year.
Share Capital has been translated at the original rate when the capital was infused and the difference on account of
exchange rate has been transferred to Translation Reserve. The opening block of fixed assets have been translated
at the opening rate prevailing at the beginning of the year. Additions / Deductions made to fixed assets have been
translated at the average rate prevailing during the year. Similar treatment has been given to accumulated depreciation
on fixed assets.
7. Accounting for derivative contracts
ICICI Bank Limited
The Bank enters into derivative contracts such as foreign currency options, interest rate and currency swaps and cross
currency interest rate swaps to hedge on-balance sheet/off-balance sheet assets and liabilities or for trading purposes.
The swap contracts entered to hedge on-balance sheet assets and liabilities are structured in such a way that they bear
an opposite and offsetting impact with the underlying on-balance sheet items. The impact of such derivative instruments
are correlated with the movement of underlying assets and accounted pursuant to the principles of hedge accounting.
Foreign currency and rupee derivatives, which are entered for trading purposes, are marked to market and the
resulting gain/loss, (net of provisions, if any) is recorded in the profit and loss account.
schedules
forming part of the Consolidated Accounts (Contd.)