foreign exchange fluctuation
This query is : Resolved
Muthu Aravind
(Querist)
25 June 2008
PLZ guide me........... exchange differences arising on repayment of liabilities incurred for the purpose of acquiring fixed assets, which are carried in terms of historical cost, should be adjusted in the carrying amount of the respective fixed assets or not ?
Sakshi Gumbar
(Expert)
25 June 2008
No. it should not be capitalized as per AS 11. The amount of fixed assets are to be converted at the rate on the date of purchase and any ED arising thereafter on payment to be taken to P&L a/c. If the payment is made in the susequent FY than the creditors balance should be converted at the rate on the last date of the FY and difference to be Taken to P&L.
25 June 2008
As per AS 11.. the gain or loss arising due to flectuation in forex rates can be EXPENSED..i mean it should be taken to P/L
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