 Welcome back to the classroom, we are taking up AS 11, effects of changes in foreign exchange rates. Okay, before I move to AS 11, I just wanted to clarify two things regarding the topic which we took yesterday on government grants. One of them, one of the topic is, you know, I started talking yesterday about something called as general grants. You know, wherein I was told that there is no general grants which are received by the government or from the government. Okay, later on through the questions and a few people had come to me after the class and had asked a few questions, the basis of that I realized that there are certain institutes which are receiving grants which are general or in the nature of promoters contribution. Okay, I had skipped that part because, you know, as I said, when I started the session I was told that there is no general grants, they are only specific things. Now let me cover that general grant or promoter contribution part in next five minutes. Okay, and I'll wrap it up. Now, see yesterday there was a question which was, say, suppose I incur 100 rupees as expense during the year and 10 rupees is what I receive as income during the year. Okay, so my net deficit is 90 rupees. That net deficit is funded by the government as government grant. Right? Now, how will you classify this grant as capital or revenue? 10 rupees is not a grant. 10 rupees is what you earn through your normal receipts from students or whatever activities you do throughout the year. Right? 90 rupees is your expenditure for conducting those activities. 90 rupees is your deficit. That 90 rupees is funded by the government. Now, how will you classify this grant? Revenue grant, recurring grant. Then where will you recognize this? As income and expenditure in your income, as income in income and expenditure account. If you do that, then your net deficit or surplus will become zero. Is that correct? But yes, I am not sure that whatever revenue grant you are receiving, you should park it in the luxury side path and then any excise which is incurred, then you should give the 100 rupees as income. Right. And when we do that, see, when do we take it to expenditure? When we incur that expenditure? That means if I take... Right. So when I say that I have 100 rupees as expenditure, that means I have already incurred that expenditure of 100 rupees. And if I have incurred that expenditure of 100 rupees, I will record that grant of 90 rupees and 10 rupees as my other income, my normal income. So my net surplus or deficit will become nil. I am asking, is that correct? Yeah. So my net income or expenditure is zero. Okay. As per accounting standard 12, what I was discussing, general grants. Okay. These type of grants are grants in the nature of promoter's contribution. See, they are funding the deficit. When the government is funding the deficit or when anyone... Say take it as a normal private company. Okay. A private company which is incurring a loss. Now if they want to run that private company, they will require infusion of money. That infusion of money will come in the form of capital. Right. Similarly, this 90 rupees, the deficit which is funded by the government is also a form of capital which is promoter's contribution. And hence they should not go into income. They should be directly kept in your capital fund. So a grant which is to fund a deficit or which is in the nature of promoter's contribution, which is generally nature. See, when I say general, I understand that you must have pointed out that we have these expenditure. Salary is this much, rent is this much or whatever. You might have put down the expenditure. But they are not trying to fund specific expenditure. They are trying to fund the deficit. They are trying to fund the institute so that it can run generally. This type of grant is a promoter's contribution grant and should be taken to capital fund. It should not be taken to income. If we are not taken to income, then in the expenditure statement, there is a 100. Deficit. This statement would be expenditure of income. So basically my income and expenditure account will show a expenditure of 100, income of 10 and a deficit of 90. This deficit, this deficit of 90 will then go to my capital fund in the balance sheet. And capital fund, my capital fund I have received 90 from the government. This 90 will go over here as deficit. But my income and expenditure account should show a deficit. And because this type of grant is a grant of promoter's contribution. That is why it should not directly go to income. See that is what I am saying. You have to differentiate between one revenue grant, capital grant. Capital grant can be for specific asset or it can be in form of promoter's contribution. Revenue grant is for revenue. Now when I say a grant is in form of promoter's contribution, I explain now that if you are trying to fund a deficit, see you are not giving grant for specific expenses. You are giving grant to fund a deficit. When you give grant to fund a deficit, it is a grant in the form of promoter's contribution. See I am talking about principles. I am talking about accounting principles, all the logic, all the principles behind the standards. The standard says that when it is in form of promoter's contribution, when it is trying to fund a deficit, it should directly go to capital fund and should not be taken to income and expenditure account. When it is trying to grant, the grant is for a specific expenditure. So I am saying there are certain institutes, I think yes over there. So because there are various institutes over here, I was trying to cover problems or issues of each and every institute. So when an institute receives grants in the form of promoter's contribution, then this is the accounting treatment which should be followed. But this is only for the promoter's contribution which you are telling. But generally when grants are received from the government of India, it will always be specific. First it will be in two segments. It is applicable to all of us. It is applicable to some of you all who are there at the back because I received a few questions yesterday at the end of the session. So I thought I will clarify wherever it is applicable because everyone might not have asked me the question. But it cannot be generalized because when we receive... Absolutely. It is revenue and capital... See that's what I said. You have to classify a grant into two parts first. Okay. A capital grant and a revenue grant. And revenue also under revenue there are specific heads like salary or... So if you have classified it as revenue grant, we have discussed that you will take it to liability and from liability to income. If it is for a specific asset, we have discussed you will take it to deferred revenue and then to income. Okay. And there are certain institutes which receive it in form of promoter's contribution. All the institutes are getting like that. In that case it will directly go to... All the institutes are getting. All the institutes are getting general development grant. Okay. We will talk about your institute. We will not talk about all of them. But for your institute if you are receiving anything in form of promoter's contribution, it will go directly to capital fund. It will not go to income and expenditure account. Correct. Clear? Yes. Okay. So let's move to AS 11. Effects of changes in foreign exchange rates. Now this standard is basically applicable for two types of transactions. Two types of issues. One is transactions happening in foreign currency and the other is foreign operations. Now when I say foreign currency or foreign operations, what do I mean by foreign? What is a foreign currency? No. Any currency which is not INR? Okay. Why INR? Because INR is my home currency. So any currency other than home currency. Okay. I will tell you a basic difference between Indian accounting standards which we will discuss throughout the session and the difference between Indian accounting standards and international accounting standards. Okay. International accounting standards do not define home currency as INR or USD. They do not define. They talk about logic, how to find out my home currency. Okay. If I ask you in what language do you speak? Okay. Now we are all Indians but we have different language in which we speak. It can be Hindi, Marathi, English. It can be any different languages depending upon which state we come from or which background we come from. Right. So like there can be different languages. Every business can deal in different currency and the currency in which they primarily deal with becomes their home currency. So if a company is into imports and exports. Okay. So if it imports from US, does some work, exports to US. So its primary currency might become USD and that might become its home currency. That is how international standards talk about. Now when we come to Indian accounting standards, it does not talk about what is your home currency. It simply states any currency other than INR is foreign currency. So like you said, like you defined a foreign currency, any currency other than foreign INR is foreign currency. That is how the standards also define. Now the standard talks about two things. As I said one is a transaction which is in foreign currency or a foreign operation. Now foreign operation means if I have a branch, a subsidiary, anything outside India. Now is the second part relevant for us foreign operations? I think no. So we will concentrate on the first part which is any transaction in foreign currencies. Okay. Now there are two principal issues which this standard deals with. One is the exchange rate which we should use to record the transactions and when we use exchange rate, there is an exchange difference which comes. So there is what exchange rate to use and how to account for the difference in exchange currency, the amount of difference. These are the two basic principles or basic issues which we will deal with. So the scope is as I said accounting for transactions in foreign currencies, translating the foreign operations financial statements and forward contracts. Now I think forward contracts is also something which we, which is not relevant from our point of view. So only the first part which is foreign currency transactions we will deal with. Okay. Now there can be four types of foreign currency transactions. The first is when you buy or sell normal goods in foreign currency. Second one is when you borrow or lend money in foreign currency. The third one is when you enter into a forward exchange contract and the fourth one is when you buy or sell a fixed asset which is denominated in foreign currency. So goods or services buy or sell or fixed assets buy or sell or borrowing or lending or foreign, this forward contract. These are the four areas which it is standard deals with. Okay. Now what are the foreign currency transactions which you face in institutes? Okay. One is fees which you receive from foreign students. Then? Okay. So consultancy expense, right? This is fees is receipt. Okay. Consultancy income. So let's classify this as income fees, consultancy, Donations you receive from foreign? Yes. Sorry? Sir. Foreign edit projects. Foreign edit projects. Let's take. Income, any other income is left? Royalties. Okay. Okay. Let's talk about revenue expenditure and capital expenditure. So capital expenditure you said is any assets, equipments, books you capitalize, right? So it is capital expenditure. Journal. Okay. Journals or books, let it be together. Journals or books. Sir, we export scientific equipment. Sorry? Import scientific equipment. Import scientific equipment. Data analysis. So that is revenue expenditure for me. Scientific equipment. Scientific equipments, right? So assets or equipments I have kept over here. Chemicals. Chemicals is revenue expenditure of capital. So this is kind of goods for me, right? And this is services for me. Membership fees. Expenditure, right? Foreign visits, yes. So traveling is the word I will put, yes. Okay. AMCs. Honorarium. Yes. Honorarium or let's also put it as consultancy fees if we are paying any. Okay. So these are the income revenue expenditure and capital expenditure. Okay. Now let's talk about the income first. Now when do you earn the income? When you earn the income, how do you recognize that income? Or how do you translate that income into Indian currency? Say suppose you have received fees of $10, right? And you have received, now there is a date when fees become payable by the students. There is a date when you receive the fees, right? And there is a date or a period over which you recognize the fees. Is this the three ways or three times when you account for fees, right? One is when the fees become accrued. Okay. One is when you fees is received. And the third is when the fees is spread over the period. Okay. Now $10. Say suppose, what is the academic year like? I mean for us it is suppose 5 July. Okay. Okay. Then? On the same date suppose. Okay. So there is a dd of $10 on the same date. Fine. So you have received $10. Now how do you convert? The conversion is whatever the bank gives. Whatever the bank credits are accounts. Whatever the bank credits are accounts. So fine. Fees is simple. Okay. Let's talk about consultancy income. Okay. So consultancy income is $10. Right. Now do you build them? Let's see when I don't deposit within 10 days or 5 days. Okay. Okay. How do you do that? Okay. Let's take that again. Say you deposit on 15th of July. Rate here was 60.50. Rate here is 61. Okay. Per USD. Right. How do you recognize this transaction? At what rate? I'll answer that. Let me take your views. Okay. 61. Then the 50 paisa exchange gain that I have received I will account for that also. Okay. I will credit the gain on foreign exchange and debit bank. Everyone does this. I'll repeat what he said. 5th of July when you receive the DD that is the last date of making the payment. Right. Now you have received the DD. So this revenue of fees should be recorded based on $10 based on 60.50. Okay. That is my revenue from fees. Then the DD is deposited in bank and bank gives you payment as per 61. So there is a fluctuation gain of 50 paisa. The difference of 61 minus 60.50, 0.50 you have got extra. This into $10 will be recorded as other income that is gain on fluctuation of foreign currency. Foreign currency. This is how you should account for this transaction. Yes. Then I should not, I should recognize the income as soon as I have received the income. You should recognize income as soon as you receive the income. On actual basis of accounting. Yes sir. 10-0 where I have received. Yes sir. That was in the last week. Yes sir. When it will drill in. No. No. You can't. See understand this. All these accounting entries whatever we do, the net effect on profit and loss will be same. But we are not preparing profit and loss to calculate the profit. We give entire details of what is the income, what type of income it is, how did we earn it. So a proper presentation. Suppose I have deposited on 31st March then I have to book. Because on 31st March I will not get the credit in the next financing layer I will receive the credit. So I have to recognize my income. So my proper presentation is I should record the income at 60.50 as fees. And balance 0.50 should come as gain on foreign exchange fluctuation. Yes sir you are doubt. Yes sir. So we have loss on foreign exchange transaction. So we will record income at 60.50 and this is 16. Loss on foreign exchange debit to bank. Loss on foreign exchange. You will not reduce the revenue head. You will book loss on foreign exchange fluctuation. Separate disclosure is required. Separate disclosure is mandatory. You have to disclose it separately as loss on foreign exchange fluctuation. Yes. So recognize the revenue. If student deposit online transfer on 5th July and the conference that is 15th July for that he has paid the fees. Then the 15th July will be considered as relevant for getting that. 5th July he has transferred and 15th July is? 15th July is the conference for which he has deposited the fees. He has transferred online $10 on 5th July to attend the conference. The conference will be on 15th July. What happens if the conference gets cancelled? Then we have to refund that fees. You have to refund the fees? Yes sir exactly. In that case the income should be recorded on 15th July when the conference happens. Okay. So your income will be booked on 15th July. Your receipt will be booked on 5th July. So your entry is suppose you know actually you are running ahead. We are talking about fees but let's take this up. So you have received at the rate of 60.50 on 5th July. Yes sir. Your conference is on 15th July at that time the rate is say 60 rupees. Yes sir. Okay. So first of all when you receive at 60.5. Okay. What you have received is 605 rupees. Right. Into $10 I have done. So 605 rupees my entry will be bank account debit to liability of 605. On 15th of July. Yes sir. When I am booking the income my entry would be it is 60 right to 600. Liability debit to income account. To gain on fluctuation. So this is 605. This is 600. This is 5. Is it clear? Yes sir. Suppose it would have been reversed. Suppose this was 590. So there will be a loss on fluctuation of 10 rupees. Yes sir. Clear? Generally for foreign students generally fees are fixed in USD in some other currencies. So in that case there is no point of any fluctuation because as and when it is getting realized because $20 he has remitted. It is converted by the bank when the credit is given during E-transfer and other things. So there is no possibility of any. No. So that's what I said. On 15th of July it is directly credited in bank and 15th of July is what you have received. See he is not talking about this consultancy thing. We are talking about the normal fees right. Normal fees. We are not talking about conference. Yeah. Normal fees as I said in the first example which I took that 15th of July is the last date. He deposited the check on 15th of July and I will get credit as per rate of exchange on 15th of July then there is no foreign exchange fluctuation. If it is denominated in foreign currency. Yes. If it is denominated in Indian currency. If it is denominated in foreign currency. $20 we are talking about. If a foreign student gives Indian currency then there is no foreign exchange fluctuation. No no. Fine. If it is we are paying for Indian student 1000 rupees is a fee. We are paying in advertisement itself for Indian student the fees is 1000 rupees. For foreign payments the fees is $20. So they are remitting $20 on various dates. Maybe 10th, 15th. We are giving a slab not at a particular date. The period is given from 10th to 30th any time you can apply maybe for the recruitment purpose. So whatever it is coming bank is giving credit at various with applying various different exchange rates. Applying on the it is fluctuating every day on day to day basis. So whatever is received we are accounting. Okay. See this is what the standard says should be done ideally. Then the standard also says that if there are lot of transactions in foreign currency. And there is not much fluctuation during the month. Then you can take an average rate and apply that average rate for all the transactions during the month. Or maybe 15 days or you can take some period. Average rate can be applied to all the foreign transactions during that period. And you can go by that average rate for the sake of convenience. So if I have 15 transactions in a month as you are saying you know I have lot of checks which I receive from foreign students. I can apply an average rate for a period and I can go by that. You need not go by each transaction what was the rate and all that stuff. Yes. I will answer your question. Okay. So let us come back to this example wherein I have received at 60.50 on 5th of July. Okay. So on 5th of July I have passed this entry. Right. On 5th of July I have passed this entry. Okay. Now on 15th of July I realized that the conference has been cancelled. And on 15th of July the rate has come to 60. So I have to refund back 600 rupees. Okay. In that case what will happen is this will not be income. This will be bank and the remaining things remain same. And suppose this becomes 610. So there is a loss of 5 rupees. So loss on exchange of 5 rupees. Okay. Clear? When exchange of 5 rupees, when it is lost, the same people will issue a remover. And it is very little to make a mention. They will blame me for this loss. They will blame me. Then you have to ask them to read Accounting Standard 11. Okay. I think that where it is mentioned in your significant accounting policies that it is mentioned on OTSP 11 and all. So you have to mention it in your significant accounting policies also that the income is recognized as per the rate existing on the date of transaction or average rate during that period. But that's accurate. But again they will blame me only that you have done this late and delayed. That's why it's item and it's on your part. Sir, I can tell you what Accounting Standards say. Now government is forcing you or is wanting you to follow a cruel basis system and follow accounting standards. When you follow accounting standards, you have to even teach CAG to follow the accounting standards. And this is what you will have to do. I mean the entire system has to change. Yes. In this case, conference has been cancelled from the institute. If the participant is, he didn't attend the conference or something. He didn't participate in the conference. We have to pay back the money. On that time the foreign amount, it has gone up. On that time we have to take the foreign gain or loss. That balancing amount we have to take is the foreign gain or loss. Yes. But problem is that why we have to bear that loss? Because it is the problem from the participant end. On that time we can pay only that less amount. See, the standard does not say that you pay 600 or 610 or 605. If you are paying them at a fixed rate, say you will pay, if you have received 605, you will pay them only 605. Then there is no foreign exchange gain or loss. If it gone up, for example, one day it was 60 and on 15th July it gone up to 610. I understand. So whatever you pay over here, the balance will come over here. If you are paying 605, then the balance will be 0 over here. Suppose my liability is to pay 10 dollars. Because the foreign exchange has gone up, I am paying only 9.85 dollars. So I am settling my liability at 9.85 dollars. That is what you are doing. When the foreign exchange has gone up, but I am paying only 600 rupees. That means I am paying only 9.85 dollars, for example. I am not paying 10 dollars back to him. If that is the case, I am settling my liability at a lower amount. So there is a gain because of settling the liability at lower amount and there is a loss on foreign exchange which we will get knocked out. If we receive the amount, they will go on 4. Under fact 80 years we are receiving all 9. So 2 car equal to 10 in their amount. 1 cent stands can see. And we have to defend that. But the dollar is gone up. So we will be spending more amount. Right. Where to pay and how to amount? What do you do currently? No situation is not valid. Then your question is invalid. You should ask someone where this... It depends on the terms and condition of the participation. Sir, if income is received by converting the bank. Bank has converted the amount. Then bank charges some bank charges plus service test. We should deduct that amount from that piece and net amount should be booked in piece. Bank charges should go to bank charges. And the gross piece will be booked as piece? Yes. The foreign currency received against SP should be kept as foreign currency only till the conference is over. No, see this is not what the standard says. This is what you have to decide. See there is two things. One is your operational aspect and your accounting aspect. Accounting standard can only guide on accounting aspects. That means it is our discretion. Your operational aspect is your discretion. If you keep it in dollars, you can keep it in dollars. And then you have foreign currency loss also and foreign currency gain also. Gain on your asset side, loss on your and both will knock off. So your gain or loss account will have a nil balance. So that is your operational aspect. Yes ma'am. He has paid his exchange rate for 500 dollars. But our bank deducts from the Indian currency whatever it becomes equivalent. And the bank deducts its charges. Now that charges how is it to be treated in the account? Okay. So let us take an example of this 10 dollars at 60.50. So I should have received 605 rupees. But then there is a bank charges of 15 rupees. So I have received 590 rupees. Right. Okay. I should book revenue of 605. So my entry will be bank account debit 590. Bank charges account debit which is my expenditure. 15 rupees. To revenue 605 rupees. Fine. Sir that is operational question. That is not accounting question. Okay. Now how to meet that deficit you have to decide operationally. Suppose there was no accounting standard 11. Still there would be deficit. How will you meet the deficit that you have to decide? Accounting standards will tell you how to account for that. Right. So you tell me how will you meet the deficit. I will tell you how to account for that. Sir. So then accounting is simple. Sir. I have asked you the question of conference. In that conference the total accumulated profit of it from 20%, 30% of each institute's name leads to that professor who is the project. So if we book this bank charge in the institute account then the professor will get extra share. The profit of the conference will not be exact. The profit should be exact. First thing. Second thing. In this case if we see what is the foreign equipment purchase. I will come to the foreign equipment. I have listed. Sir I will cover all of them. Don't worry. So I will come to the foreign equipment. Let's talk about the fees or you know the income part first. Let's talk about. So then the profit of the conference will be wrong and the extra share will be given to the professor. So you. The main fund of the institute will be deducted from the bank charges. You put the project in the charge of the conference. So when the PNL of the conference will be made or the income and expenditure account will be made. So the fees can be deducted from the net by deducting the bank charges. See. Why don't I do one thing? Why do I make the income and expenditure so big? I made two lines. Net income, net expenditure, net surplus. So then the transfer of the bank charges from JV. Simple. I mean the full page of income and expenditure is made. Do you need anything? Just net surplus. No sir. If we do this then the gain and loss of foreign equipment will change. If the bank charges. See what is my revenue? My revenue is Rs. 605. What is my expenditure? 15 is my expenditure. He is not paying me net revenue. If I bill him, I will be billing him for $10. He will be paying me Rs. 605. The bank has put charges in the middle. So that is not my net income. Bank charges will go to bank charges. Like gain or loss on foreign exchange fluctuation will go to gain or loss on foreign exchange. Transfer the net of gain or loss with the income. I am not netting of gain or loss with the income. After that we will transfer the bank charges amount to that particular conference account. Yes, why not? Okay. Conferencing income and expenditure will be made. Then you can debit it. Yes sir. I said that once you got the receipt on 5th July. Yes. So you converted foreign currency to Indian rupees. Right. Then on 15th you dueled your conference. Yes. So will you consider the conversion at that time too? One second. See, you have to understand when you book the income. On 15th or 5th. In your case, you book the income on 15th. Sir, foreign currency conversion is a matter. For that, when is the transaction taking place? Timing of transaction is important. Sir, the fact that the bank will not get the receipt is trying to create profit. See, you have earned only when you booked the income. Sir, the matter is only to conversion of foreign currency. So at that time of receipt or payment it should be at that time. It should not be at JV's time too. It should be at JV's time. See, understand this. When will we book the transaction? When will we book the revenue income? On 15th. Sir, I was saying that the matter does not differentiate between two things. Listen to me. When will we book the income? On 15th. We will book the income on 15th. Yes. When we book the income, I will follow AS9. Right? You have to measure AS9. You will measure what you have got. But sir, my Indian rupee... Listen to me. When AS9 says what I have got I will measure it. Yes. What I got? Did you get 10 dollars or 605 rupees? Sir, I got 605 rupees. I got 10 dollars. Sir, I got 605 rupees on 5th July. I got 10 dollars. Sir, this is what I am saying. It is different. Sir, I already had 605 rupees on 5th July. Sir, you asked for 600 rupees or 10 dollars? I asked for 10 dollars. You asked for 10 dollars or 605 rupees? I asked for 10 dollars. You asked for 10 dollars. When should we measure it? On 15th or 5th July? Sir, I am saying this. We will discuss it immediately. If I ask for 600 rupees from it then foreign exchange fluctuation will book it. So, whether it comes with 9.85 dollars or 10.15 dollars will be its headache. It is giving me 600 rupees. At that time, I will book 600 rupees of income. But I am asking for 10 dollars from it. If I am asking for 10 dollars from it then my income is 10 dollars. When will I recognize 10 dollars on 15th July? The day I recognize it, I will measure it. And I will measure it at the rate of that day. If I get it on 20th or 5th July? Any other questions? Sir, we will take the exact measurement. On 15th July, we will take the exact measurement. But when it comes to 5th July, can you take any approximate rate for conversion on the site of RBI? If you come to 5th July, you can take any conversion of the bank. You can take it from the site of RBI. There is a website called OANDA. You can take it from that too. There is another website. But you can follow any website consistently. And take a print or screenshot of it as a proof that I have followed it. Sir, can you follow the website of RBI? Sir. You can. So, my standard is not that you follow the website of RBI or follow ABC or follow XYZ. The standard is that you follow the website consistently. So, if you have done that for one transaction, then do that for every transaction. And you can take a proof of that so that if anyone asks you, you have the proof that I have followed it. Sir, the actual conversion that the bank has done on 5th July, we will take it from there. Yes, sir. You can do that. Okay. Go to the consultancy. It is similar. Okay. Do we raise a bill in the consultancy? Do we raise a bill? Yes. So, like we... Right. We raise a bill in dollar. So, as we spoke about 5th July and 15th July in case of conference, similarly will be the case in case of consultancy. You will book the income when you raise the bill. Right. So, suppose 5th July, I raise an invoice. 15th July, he made the payment. Okay. So, 5th July, when I raise an invoice of 10 dollars, that is when I will book an income and at the exchange rate existing on 5th of July. Okay. 15 July, when I realize it, whatever is the difference between what I booked and what I realized, which is 60.5 and 61, I will book as gain or loss on foreign exchange. Same entry. Same entry will take place. Sir, there were 10 days the average to calculate the bookie or dollar rate. So, not for 5th or 15th. If there are only these two transactions, I told you that if there are many transactions, then you can take the average of a month. And you can record everything on the average rate of that month. Even on travel. Even on travel, you can take the average rate. So, I went to outside India for 10 days, to US. So, at that time, whatever is spent in 10 days, all total expenses in USD multiplied by one average rate and I will have total expenditure. So, I can do that. If there are many transactions, then you can take the average rate. If there are only two transactions, then you have to take specific rates.