Valuation of fixed assets

Save Share

This query is : Resolved

aakashgilda (Querist)

11 July 2013 I am doing an audit of an company,in which Some capital assets are purchased form outside India. Invoices are in dollars and euros,while making the payment to the parties the foreign exchange gain or loss arising during payment should be debited or credited to the capital asset na.
Is this treatment right ?
If closing balance as on 31-3-2013 is being seen then closing balance valued as on 31-3-2013 loss or gain should it be debited or credited to capital asset only ?

Anil Sankar V

Anil Sankar V (Expert)

11 July 2013 As -11 has to be followed. when asset is purchased , any loss / gain shall be either debited or credited to FA a/c.the value of FA shall be in INR on the date of purchase(valued on the date of purchase and not on 31/3/2013). the above logic applies only for indian resident company.

aakashgilda

aakashgilda (Querist)

11 July 2013 But we have to prepare restatement of closing balances of the foreign companies.so as per this the statement,Closing balance payable should be valued as on 31-3-2013 & if any Exch gain or loss must be debited or credited to p/l a/c !

Anil Sankar V

Anil Sankar V (Expert)

11 July 2013 yes, then ur right. but the above rule specifically applies for indian resident co. not to foreign co.

aakashgilda

aakashgilda (Querist)

11 July 2013 Actually the company of which i am doing the audit its an MNC,It has incorporated an company in India to run the business.

Anil Sankar V

Anil Sankar V (Expert)

11 July 2013 it is an indian company.

aakashgilda

aakashgilda (Querist)

11 July 2013 Please make me clear that,
now i have purchased a capital asset form a foreign supplier,i have not paid amount till 31-3-2013.Now as per rule i have got the restatement of the foreign suppliers.Exchange gain is arising in case of the capital asset supplier,in this case should i credit the gain to fixed asset or P/L ?
And also give the reference for the opinion u will give,if its feasible....

Anil Sankar V

Anil Sankar V (Expert)

11 July 2013 firstly , as-11 is not applicable to individuals.

in case of company incorporated in India, as-11 applies, value of sundry crditor changes as he has to be valued on 31-3-2013, therre will be no change of value in FA.any gain/loss (assuming)on 31-3-2013 on sundry creditors will be charged to profit & loss a/c.hope it is clear?

Message likes : 1 times

aakashgilda

aakashgilda (Querist)

11 July 2013 yes Thank you

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now