19 October 2012
The accruals should be made for all liabilities for which goods have been received or delivered in line with in the terms and conditions of the contracts / purchase orders. This applies to all types of liabilities whether these are incurred in a functional currency of the entity or the foreign currency. These accruals should be made even if the actual invoices are not received provided you have received the ownership of the products / services under discussion. Trust this helps.
19 October 2012
Thank u Gurcharan. My question is whether this accruals made are monetory liabilites or non monetory liabilites as the amount of accrual involves a degree of estimation specially if they are made in respect of non -purchase order based expenses. For example if a India based Telecom company is required to pay a foreign operators for calls carried and termainated out side India. The foreign opertor has not raised invoices but the indian teleco needs to accrue the cost based on the calls it has hannded over to the foreign teleco say during the month of Jan 12 and for which rates have been agreed on per minute basis in USD . Now whether this accrual made in the absence of invoices is a monetory or non monetory liability for AS 11
20 October 2012
Thanks for a few additional details. As you have a liability towards the foreign vendor, you will estimate the amounts due in foreign currency and convert the same into indian ruppes at the closing exchange rate. This would be considered as a Monetary Liability under AS 11. The concept of monetary liabilities exist in the absence of actual invoices as well.
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