AS 10 & AS 11

We hav a vendor from China from whom we purchased fixed assets. Now we are writting off his balance liability to the extent of US$ 12,21,805.

There are certain query in this regards for which I need your opinion.

1) Whether there will be reduction in value of Assets?

2) If yes, At what exchange rate assets to be reduced? Is it at original exchange rate when the assets were originally booked or todays exchange rate?

3) If assets are reduced taking original exchange rate, then whether effect of exchange rate diff. between creditors(INR) and value of assets reduced to be given?

4) If assets value is reduced, depreciation is to be recalculated? From the starting year? Whether the effect to be given in financials?

5) What will be treatment of depreciation under Income Tax Act ?

Replies (2)

Guys please help me out

Any write back of a Capital Creditor has to be adjusted with the respective asset value.

Depreciation will be caclulated on the revised value and the charge will be accounted prospectively.

If the earlier period exchange rate was accounted in profit & loss account then it would not be reversed.

If para 46 was applied in case of exchange fluctuation was on long term liability related to FA, then exchange flutuation reversal does not arise.

Regards,

 

 

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