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    As - 11

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    rreang
    This document summarizes the Indian accounting standard AS-11 on the effects of changes in foreign exchange rates. It covers the need to translate foreign currency transactions and operations into the reporting currency, and classifies them into three categories for accounting treatment. It provides guidance on initial recognition, valuation, treatment of exchange differences, and disclosures for foreign currency transactions, foreign operations, and forward exchange contracts. The standard is substantially similar to IAS 21 but differs from US GAAP in some terminology and treatment of hedging transactions.

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    As - 11

    Uploaded by

    rreang
    131 views18 pages
    This document summarizes the Indian accounting standard AS-11 on the effects of changes in foreign exchange rates. It covers the need to translate foreign currency transactions and operations into the reporting currency, and classifies them into three categories for accounting treatment. It provides guidance on initial recognition, valuation, treatment of exchange differences, and disclosures for foreign currency transactions, foreign operations, and forward exchange contracts. The standard is substantially similar to IAS 21 but differs from US GAAP in some terminology and treatment of hedging transactions.

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    AS- 11

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    This document summarizes the Indian accounting standard AS-11 on the effects of changes in foreign exchange rates. It covers the need to translate foreign currency transactions and operations into the reporting currency, and classifies them into three categories for accounting treatment. It provides guidance on initial recognition, valuation, treatment of exchange differences, and disclosures for foreign currency transactions, foreign operations, and forward exchange contracts. The standard is substantially similar to IAS 21 but differs from US GAAP in some terminology and treatment of hedging transactions.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    131 views18 pages

    As - 11

    Uploaded by

    rreang
    This document summarizes the Indian accounting standard AS-11 on the effects of changes in foreign exchange rates. It covers the need to translate foreign currency transactions and operations into the reporting currency, and classifies them into three categories for accounting treatment. It provides guidance on initial recognition, valuation, treatment of exchange differences, and disclosures for foreign currency transactions, foreign operations, and forward exchange contracts. The standard is substantially similar to IAS 21 but differs from US GAAP in some terminology and treatment of hedging transactions.

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    Download as PPT, PDF, TXT or read online from Scribd
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    AS11 EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES (REVISED 2003)

    Need and Objective


    Transactions done in currency other than reporting currency is to be translated in reporting currency

    Export of goods & services

    Need and Objective Import of goods & services Foreign branches


    Subsidiary/associate/JV overseas in

    Scope & Applicability AS applies to Accounting for transactions in foreign currencies


    In translating the financial statement of foreign operation Accounting for forward exchange contract

    Non- applicability Re-statement of financial statement from its reporting currency to another currency The presentation in a cash flow statement of cash flows arising from transaction in a foreign currency Exchange difference arising from foreign currency borrowings covered by AS-16

    What are Foreign Transactions?

    Currency

    Transaction denominated in a foreign currency or that require settlement in a foreign currency are called foreign currency transactions.

    Classification for Accounting Treatment Category I Buying or selling the goods or services Lending and borrowing in foreign currency Acquisition & disposition of assets denominated in foreign currency.

    Classification for accounting treatment Category II Foreign branch An associate Joint venture Foreign subsidiary

    * Integral operation *Non-integral operation

    Classification for accounting treatment Category III For managing risk/hedging For trading and speculation

    Accounting treatment (Category-I)


    Initial recognition of foreign transaction.
    Valuation at the balance sheet date Contingent liabilities Treatment of exchange difference

    Accounting Treatment (Category-II)


    Integral foreign operation

    Non-integral foreign operation


    *Foreign currency translation reserve
    *Consolidation procedure (foreign subsidiary & joint venture

    Treatment reserve

    of foreign currency

    On partial disposal proportionate foreign currency translation reserve is recognised as income or expense
    On full disposal, whole foreign currency translation reserve is recognised income or expense

    Change in classification Integral to non-integral


    Non-integral to integral
    *Change with prospective effect

    Forward exchange contract Means an agreement to exchange different currencies at a forward rate
    * For Managing risk
    - Premium or discount at the inception - Exchange difference

    * Held for trading or speculation

    Disclosure
    Exchange difference included in net profit or loss. Foreign exchange translation reserve. Reconciliation of foreign exchange translation reserve. Change in classification of significant foreign operation Foreign currency risk management policy (encouraged)

    Significant IAS/IFRS

    difference

    with

    Substantially the same as AS-11 Forward contract are covered by IAS-39

    Significant difference with US GAAP


    Uses different terminology such functional currency Substantially the same as AS-11 FC/hedging is covered by FASB-133 as

    Issues in AS-11
    Treatment of exchange difference
    Asset linked foreign exchange borrowing and resulting exchange difference

    Amendment in AS-11 dated 31st March 2009


    Re-statement of foreign currency denominated monetary assets and liabilities

    Issues in AS-11
    Translation difference of foreign operation Forward contract - hedging - speculation Forward contract for future firm commitment Accounting for forward contract IFRS (IAS-21)

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