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Insertion of para 46 in as -11 of icai

Vedika (Article) (32 Points)

21 March 2014

ICAI has inserted new para 46 in AS-11.But can the entities other than company avail this para?Because there was a condition that the companies should have availed para 46 by 31.03.2007 and 46A by 31.3.2012.

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8 Replies

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 21 March 2014

Other then companies cannot entitled to availed this para..

Vedika (Article) (32 Points)
Replied 21 March 2014

Then plz share me the reason behind insertion of para 46A by ICAI.

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 21 March 2014

If u go behind the notification will find the reason is very simple ...Its MCA politeness on mNC companies to save him from foreign currency monetary losses which is arisen due to change in exchange rates... As per companies Accounting Standards Rule 2009- Para 46 should be applied only on Companies. This para is to be applied from retrospective effect from accounting year begining from 7.12.2006. Once the companies applies this para it can not be revoked. Its to be applied only on Foreign Currency Monetary Items.

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 21 March 2014

C.A.SUNIL HUKKERI (CHARTERED ACCOUNTANT) (58 Points)
Replied 22 March 2014

1) Applicable only to companies and not to any other form of non corporate entieies.

2) Exchange difference relating to depreciable assets is not routed through profit and loss account as normal treatmnet. because of this para 46 there was option to company to deviated from this normal treatment and capitalise forex gain or loss of depreciable asset and claim depreciation on gain or loss accordingly. the logic seems to be not over burden p&l becuase of exchange difference attributable to deprecible asset

3) please read also section 43 A of income tax also which help you to understand.

4) Availment of par 46 was optional

Vedika (Article) (32 Points)
Replied 27 March 2014

Yes ,I appreciate your knowledge regarding the matter.But my question is,the Accounting Standards issued by ICAI are applicale on Non-Companies . So is the insertion of Para 46a done along with providing the opportuniy to the non companies to avail it ?If yes then what is the date within which they should avail it and if no then what is the effect of adding this para.

CA Saroj Kumar (Keen to learn something new every moments) (2588 Points)
Replied 27 March 2014

In recent announcement issued by ICAI, Para 46A of Accounting Standard 11, Effect of Change in Exchange Rates notified by National Advisory Committee on Accounting Standard, which was previously available only to Companies, is now made available to Non-Corporate Entities (i.e. entities other than Companies). Thereby meaning those entities can now:-(i) capitalise the gain/(loss) on long term foreign currency monetary items (raised for financing of fixed assets) due to exchange difference to Fixed Asset and shall be depreciated over the useful life. and (ii) capitalise the gain/(loss) on long term foreign currency monetary items (raised for financing of other than fixed assets) due to exchange difference to Foreign Currency Monetary Items Translation Difference Account to be disclosed under the head Reserve & Surplus and to be written off during the period of loan or upto 31.03.2020 whichever is earlier

Vedika (Article) (32 Points)
Replied 27 March 2014

As in case of companies ,they should have availed this para by 31st March 2012.But as the provision was not available to non companies to avail it on that date , we can say that non of the non company is availaing it now.So , though institute has inserted this para,the non companies are not able to avail it as they had not availed the same by 31st March 2012.Is it so?