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Editorial Board on Accounts and Audit
  • Foreign currency loans taken for Fixed Assets

    by Chirag on Tuesday, October 23, 2018 at 02:32 AM

    Dear Sir, As per AS-11, If Foreign currency loan is taken for acquisition of Fixed Assets, then Exchange loss or gain on Balance sheet date will be debited or credited in Fixed Assets A/c. Query- If there is exchange loss on Balance sheet date then it will be DEBITED to Fixed Assets a/c. Now query- Whether Depreciation on Asset will be charged only on Opening Balance OR it will be charged on TOTAL Of (Op. Bal + Ex. Loss ) ??

    Replied byEditorial Board Wednesday, October 31, 2018 at 04:34 PM

    The exchange loss debited to the cost of fixed assets in accordance with para 46A of AS 11 shall be depreciated over the balance useful life of the asset. So, on the debited amount no depreciation shall be provided in the year in which it is debited. However, in the subsequent year the opening balance shall include the previous year forex loss and hence depreciation shall be provided on total amount.

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