17 February 2009
What treatment must be given to exchange difference arising at the time acquiring Fixed Assets. As per Revised AS-11, this must be routed through P & L A/c. But as per Companys Act, this must be adjusted to the cost of Assets. However, As prevail Companys Act. Can you just clarify this? However, AS 11 is silent on whether the exchange difference arising before capitalistion (i.e. if any advance payment is made) or after capitalisation (i.e. final settlement done after capiatalisation) difference must be routed through p& L A/c. So, does AS-11 mean that both must be routed through P & L A/c or only post or only pre capitalistion must be routed through P & L A/c
18 February 2009
Mr.Avinash your assumption that AS-11 prevails is grossely incorrect. "Companies Act prevails over Accounting Standard". This point is even clarified by ICAI.
19 February 2009
Payment made before acquisition of the asset is covered by AS-16 on borrowing cost. Payment made after acquisition is covered by AS-11. Regarding exchage difference my view is that it should be capitalised as per Schedule-VI of companies Act. Since act always prevail over the AS.
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