08 August 2008
schedule VI says it should b taken to carrying amt of fixed asset. But AS 11 Revised 2003 says it should b charged to P&L Account which is mandatory in nature. but as AS 11 is in conflict with law as schdule VI has not yet revised in this case auditor will not qualify his report for not complying with AS 11. and as per income tax act section 43A it shall be taken to carrying amount of F.asset hence to b capitalised
08 August 2008
AS-11 issued under Companies accounting standard rules, 2006 says method prescribed in the standard should be followed irrespective of the treatment suggested in Schedule VI of the companies act. Hence, it should be expensed.
(Companies like Reliance, Airtel went on capitalising and reported that if such exchange difference was taken to P&L their profits would have come down by so many crores. Refer "The Business Line" - 06.08.08(Front Page))
So the treatment is it should be expensed. But they have questioned the validity of the standard.
Under Income Tax Act, Sec 43A should be followed and remember, that section talks only about the payment and not the mere restatement.
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