14 January 2012

AS 11 Amendment

Amendment in Accounting Standard 11 relating to "The Effects of Changes in Foreign Exchange Rates" 

The Central Government in consultation with National Advisory Committee on Accounting Standards, has made an amendment to the Companies (Accounting Standards) Rules, 2006 through notifications G.S.R. dated 29.12.2011, viz Companies (Accounting Standards) Amendment Rules, 2011 and Companies (Accounting Standards) (Second Amendment) Rules, 2011.

The amendment in Accounting Standard (AS) 11 relates  to "The Effects of Changes in Foreign Exchange Rates", which has been made in light of foreign exchange losses suffered by India Inc, due to significant rupee downslide against the US dollar in recent months. 

The Government has extended the deadline from March 31, 2012 to March 31, 2020, for companies to charge the exchange differences arising on reporting of long term foreign currency monetary items, at rates different from those at which they were initially recorded or reported during the year, as far as they relate to the acquisition of a depreciable capital asset. The same can be added to or deducted from the cost of the asset and has to be depreciated over the balance life of the asset and in other cases, it can be accumulated in a " Foreign Currency Monetary Item Translation Difference Account" in the financial statements.

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