04 December 2012
As per AS 11 in the case of an integral operation the Depreciation expense has to be converted at Average Rate while the corresponding increase in the provision for Depreciation account has to be shown in the balance sheet at historical cost converted at the date of the transaction. This bring my attention to the problem that on the same transaction, because of use of different exchange rates a difference arises... can anyone suggest how to deal with that???....
06 December 2012
1)For Asset use historical rate for recording purpose. 2)For recording of loan use rate on the date of disbursement of loan i.e. rate as per point.1. 3) For repayment of loan use rate on the date of repayment because it is not a revenue item. 4) For recording of interest use avg. rate because it is a revenue item. 5) Difference arising out of that charged to asset account. And calculate depreciation on remaining amount after adjustment. 6) If asset is purchased after 2002 then revised AS-11 is applicable & whole difference is chargeable to revenue account.
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