What is Para 46 and 46A of AS 11?

What is Para 46 and 46A of AS 11?

Para 46 and 46A applies exchange gain or loss arising on long term monetary option, where entity has the irrevocable option to treat the gain/loss as capital in nature instead of revenue item. This treatment being in violation of financial reporting fundamentals has been removed in Ind AS (Carved IFRS & IAS)

What is AS 11 accounting standard?

The standard deals with the principal issue with respect to accounting for foreign operations and foreign currency transactions in deciding which exchange rate to be used and a guidance on recognizing the financial effect of changes in exchange rates in the financial statements.

What are monetary and non monetary items under AS per AS 11?

the foreign currency monetary items must be recorded at the closing rate on the balance sheet date. Foreign currency monetary items include cash, receivables, payables, etc. Non – monetary items include fixed assets, inventories, investments in equity shares etc.

How is exchange difference treated?

Accounting Treatment of Exchange Difference Approach # 1. Single Transaction Approach: Single transaction approach is based on the premise that any transaction and its settlement is a single event. So if any exchange difference is there that may be charged to cost of goods purchased or to an export sale.

Is para 46A of as 11 still applicable?

Para 46A is applicable to long term foreign currency monetary items for which the option is elected after 31 March 2020. Such option shall remain enforce without any timelines until the long term foreign currency monetary items remains on the balance sheet.

What are monetary items as per AS 11?

7.11 Monetary items are money held and assets and liabilities to be received or paid in fixed or determinable amounts of money. 7.12 Net investment in a non-integral foreign operation is the reporting enterprise’s share in the net assets of that operation.

What is monetary items as per AS 11?

Which accounting standards are used in India?

Indian Accounting Standard (abbreviated as Ind-AS) is the Accounting standard adopted by companies in India and issued under the supervision of Accounting Standards Board (ASB) which was constituted as a body in the year 1977.

What is monetary item?

A monetary item is an asset or liability carrying a value in dollars that will not change in the future. These items have a fixed numerical value in dollars, and a dollar is always worth a dollar. The numbers do not change even though the purchasing power of a dollar can potentially change.

What is an example of monetary item?

Examples of monetary items include cash, accounts receivable, accounts payable, bonds, and short-term loans. In periods of high inflation, holding monetary liabilities increases a firm’s purchasing power, while holding monetary assets decreases it.

What are exchange differences?

International Accounting Standard 21 (IAS 21) defines exchange difference as “the difference resulting from translating a given number of units of one currency into another currency at different exchange rates”. The functional currency is the currency of the primary economic environment in which the entity operates.

Is Para 46 still applicable?

Para 46 is applicable to long term foreign currency monetary items for which the option was elected before 31 March 2020. Such option elected before 31 March 2011 shall end on 31 March 2020. The balance accumulated in FCMITDA (if any) shall also be amortized upto 31 March 2020.

What is as 11 Para 46/46a?

AS 11 – Para 46/46A The general principle is that exchange differences shall be taken to the statement of profit or loss, irrespective of the exchange difference arising on a revenue account or a capital account. But the Central Government of India, vide Notification dated 31 March 2009, had inserted the aforementioned paragraph in the AS 11.

When are paragraphs 46 and 46a introduced in as 11 deemed to be?

In view of the above, paragraphs 46 and 46A introduced in AS 11, modified from time to time, as applicable to companies, shall be deemed to be introduced in AS 11 issued by ICAI for entities to which the Companies Act is not applicable with effect from the accounting periods as stated in paragraph 1 above as follows:

What is ICAI’s para 46A?

Later in ICAI’s efforts to bring ICAI’s AS (Applicable to entities other than companies) at par with MCA’s AS (Applicable to Companies), ICAI introduced Para 46A offering similar option of capitalization to entities other than companies and extending the time frame for availment of the option.

What is as 11 in accounting?

AS 11 The Effects of Changes in Foreign Exchange Rates deals with the reporting of foreign exchange transactions in the financial statements