Capitalisation of foreign exchange difference

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siddaramesha (Querist)

04 August 2008 Hi.. as per AS 11 co's r allowed to capitalise the exchange rate differece relating to foreign currency liability incurred in relation to fixed assets. This has been withdrawn as per AS 11(R), but as per ICAI guidelines companies r allowed to capitalise till the amendment of companies act. My question is whether Act has been amended in respect to this?

Thanks in advance..

siddaramesha

siddaramesha (Querist)

05 August 2008 Hi please can any body tell me?

siddaramesha

siddaramesha (Querist)

05 August 2008 Hi please can any body tell me?

CA N RAJA

CA N RAJA (Expert)

05 August 2008 Reference can be made to Companies Accounting Standard Rules 2006.

In that, there is a foot note given to AS - 11 which says,

"Accounting Treatment suggested in this standard shall be applicable irrespective of the treatment suggested in Schedule VI, of the Companies Act".

Hence,exchange difference arising on foreign currency liability incurred in relation to fixed assets should be charged to Profit and Loss Account and it cannot be capitalised.

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