03 July 2012
As per AS-11 change in foreign exchange in long-term monetry assets (fixed assets, long term liabilities) in cost of fixed assets at the year end.
My ques is this that whether dep has to provide on that addition (due to adding/deduction for exchange difference)
03 July 2012
Depreciation is calculated prospectively for amortising in the residual life of the asset.
If capitalizations are done on quarterly basis then :
June 30 Fx capitalized – 100, Depreciation Nil
September 30 Fx Capitlised – 10 ( July to Sept) Depreciation for three months for Fx capitalized on June 30. For Capitalisation on Sept 30, Dep is Nil.
December 31 Fx Capitalised – (50) (Oct to Dec) Depreciation for six months for Fx capitalized on June 30 and 3 months for fx capitalized on Sept 30.. For Capitalisation on Dec 31, Dep is Nil.
This goes on…
Point to note: The depreciation rate used for Fx will have to be higher than Schedule XIV so that it is depreciated in the remaining useful life of the asset.
CAclubindia
