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As-11

SACHIN garg (ca ) (181 Points)

19 September 2011

whether advance received from foreign customers by a company is "monetary item" in terms of AS 11?

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6 Replies

(Guest)

Monetary items are those items which fullfills 3 conditon i.e.

recivable/payble+amount is fixed under a contract+to be setteled in foreign currency

if ur tanking about a advance which is nt to be setteled in future(thats what i m assuming ) it us nt an monetry item

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ashish gupta ( student) (1922 Points)
Replied 19 September 2011

yes if the advance is for supply of goods or something like that its not monetory item,

CA Sachin Rastogi (Audit/IFRS Manager) (338 Points)
Replied 19 September 2011

Monetary assets are those assets and liabilities which are received or settled in fixed determinable units of currency. In your case, against the advance from the customer u will render services and u will not pay in cash. Thus, advance from customer is a non-monetary item

SACHIN garg (ca ) (181 Points)
Replied 20 September 2011

Yes it is for supply of goods . Can u pls give the relevant EAC opinion or the name of any book in which i can find such a illustration.

CA Sachin Rastogi (Audit/IFRS Manager) (338 Points)
Replied 20 September 2011

Mr Garg, you can check the definition of the monetary items which itself explains that where an advance is received against which there will be supply of goods or services will be rendered then such advance is a non-monetary item as this will not be settled in fixed determinable units of currency.

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Ateeq (CA - Final) (218 Points)
Replied 24 September 2011

Agreed with Sachin.

Because AS-11 will have impact in balance sheet where you have to show the balance,

Say as loan taken from foreign institutional investors or any asset purchased from foreign companies. Further the deposit is based on the conversion of indian rupee means you might have recieved the amount after conversion say Rs. 30000 as an advance and you will be liable even for the same. If you have received it in foreign currency then AS-11 applicability will be measured.