AS 11 / sch VI compliance

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This query is : Resolved

Ashwini (Querist)

25 January 2008
After amendment to AS 11 and Schedule VI on foreign currency transactions involving fixed assets, Can anyone guide me of the treatment of exchange fluctuations for foreign currency loan utilised for purchase of fixed asset from a country outside India? Is gain / loss charged to P/L or adjusted in the carrying cost of Assets?

Please guide.

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)

26 January 2008 FROM April 1, 2004, companies would have to recognise exchange differences arising out of liabilities incurred for acquiring fixed assets in their profit and loss account prepared for a particular accounting period.

This is in variance with the earlier requirement of the standard, which wanted adjustment of exchange differences arising out of repayment of liabilities incurred for acquiring fixed assets in the carrying amount of the respective fixed assets.

The bottom lines of companies will be significantly impacted by this revised standard(AS-11),of the Institute of Chartered Accountants of India (ICAI) on the effects of changes in foreign exchange rates.

Ashwini

Ashwini (Querist)

27 January 2008
Thank you sir.

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