03 November 2009
Does the increase / decrease in long-term liability on a/c of exchange fluctuations effect cost. How is this possible - Under AS 11 is this not taken to P&L?
10 November 2009
As per Revised AS 11(2003)all the exchange differences were required to be charged off or credited to P/L A/c. However, as per the limited revision of AS 11 w.e.f.31.3.2009, an option is available in case of fixed asset linked long-term foreign exchange liability. Increase or decrease in liability can either be adjusted in P/L A/c or can be adjusted in Asset A/c. Keep in mind that previously Adjustment in asset account was not allowed by Revised AS 11 (2003,therefore if you switch over to it now, it will amount to change in accounting policy and disclosure as per AS 5 will be required.
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