Fixed asset purchased in foreign currency and its treatment

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Rajendra Mehta (Querist)
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17 September 2012 Dear sir,

My client, a Ltd company has purchased an asset in foreign curreny on 17.01.12.

At the time of purchase the price was $12950 i.e. Rs.647500/-(Rupees was 50 = 1 $ ).
At the time of payment the rate was
(Rs.53= $ 1). The difference of amount in foreign currency is Rs.38850/-.

Please tell me the treatment for fixed asset in the books of accounts.

Rathin Roy

Rathin Roy (Expert)
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19 September 2012 The relevant Accounting standard is AS 11 - which allows (refer to insertion of para 46A vide GSR 914(E) dtd 29.12.2011) capitalisation of the loss incurred on account of exchange loss. In other words you would capitalize on the purchase date at the rate of Rs. 50, and on the date of final payment capitalize the difference of Rs. 3 - even if two accounting years may be involved in the transactions.