Presentation of Foreign Currency Monetary Item Translation Difference Account (FCMITDA)
In the Revised Schedule VI format, no line item has been specified for the presentation of “Foreign Currency Monetary Item Translation Difference Account. Therefore, the Council of the Institute at its 324th meeting held on March 24-26, 2013 at New Delhi, considered the issue regarding the presentation of the FCMITDA in the balance sheet.
The Council considered the definition of an asset given in the Framework on Preparation and Presentation of Financial Statements issued by ICAI which states as follows:
“An asset is a resource controlled by the enterprise as a result of past events from which future economic benefits are expected to flow to the enterprise.”
Since the balance in FCMITDA represents foreign currency translation loss, it does not meet the above
definition of ‘asset’ as it is neither a resource nor any future economic benefit would flow to the entity
therefrom. Therefore, such balance cannot be reflected as an asset.
Accordingly, the Council decided that debit or credit balance in FCMITDA should be shown on the “Equity and Liabilities” side of the balance sheet under the head ‘Reserves and Surplus' as a separate line item.
NOTE: FCMITDA is opened (by virtue of para 46 and para 46A of AS 11 to the Companies (Accounting
Standards) Rules, inserted by the Ministry of Corporate Affairs) for exchange differences arising on reporting
of long-term foreign currency monetary items at rates different from those at which they were initially
recorded during the period, or reported in previous financial statements, insofar as they relate to the
acquisition of a non-depreciable capital asset.