08 January 2012
Dear sir Can u please tell me about the treatments of exchange differences as under AS-11, and if one method is applied can it be switched to another method. Thanks in advance.
08 January 2012
As - 11 talks abt the difference in exchange rates at reporting date and treatment of FWD/Option derivative contracts.
As per AS 11 exchange difference on Loan should go to P&L (earlier) however now MCA has issued notification according to that all the difference arising on long term loan can be capitalised/or kept in reserve (this is only for long term loans and for conditions requested to see the notification).
Further, for premium on option/forwards, it has to go to P&L.
However Gain/Loss on forwards/option on long term contracts can be treated as per the notification (as above).
Option given by notification once applied can;t be taken back.
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