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AS 11
AS 11
Free AS AS All
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AS-11: THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

1. FOREIGN CURRENCY 2. FORWARD EXCHANGE 3. FOREIGN

TRANSACTIONS CONTRACTS OPERATION
Q 1 to 6 Q 7& 8 Q9
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AS-11: THE EFFECTS OF CHANGES IN FOREIGN EXCHANGE RATES

AS 11
1. FOREIGN CURRENCY 2. FORWARD EXCHANGE 3. FOREIGN
TRANSACTIONS CONTRACTS OPERATION
Q 1 to 6 Q 7& 8 Q9

FOREIGN CURRENCY TRANSACTIONS

Transaction which is denominated or requires settlement in a foreign currency.
Buying and selling of goods or services in foreign currency
Lending or borrowing in foreign currency
Acquisition and disposition of asset denominated in foreign currency

Accounting

Initial recognition Subsequent recognition

Spot rate
Monetary
HALQ1 Non-monetary
C
receivable or payable is fixedAN receivable or payable is NOT fixed
U LP
RAH
Creditor A Debtor
C PPE
Bill Payable Bill Receivable Intangible Asset
Loan taken Loan given Investment in Equity shares
Cash

Closing Rate Historical Rate

(Rate on Balance sheet Date)
If item is revalued
Q2&3 Rate on Revaluation Date

NOTE 1: Special case: (optional)

Monetary Item (Long term)

Loan Related to fixed Asset (Depreciable) Others

Exchange Difference is Transferred to FCMITDA
Adjusted to cost of Asset & amortised over period.
Q4 Q5
Q6
FCMITDA: Foreign Currency Monetary Item Translation Difference Account
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FORWARD EXCHANGE CONTRACTS

AS 11
an agreement to exchange different currencies at a forward rate

Not for Trading or speculation purposes For Trading or speculation purposes

Premium or discount – amortize as expense Gain or loss recognized in the
or income over the life of contract. Statement of P&L for the period.
(Over Contract Term) (Immediately)
Q7 Q8

FOREIGN OPERATION
It means subsidiary / Joint Venture / Branch of Company.

Expenses / Income Actual Rate (If not,then Average Rate)

Opening stock Opening Rate
Monetary items Closing Rate

Good sent to HO Actual

H AL
Closing stock Integral
A NCActual Rate (If not,then Closing Rate)
ULP
Non-Integral Closing rate
A H
R
CA
Fixed Asset Integral Actual Rate
Non-Integral Closing rate

Exchange Difference Integral P&L

Non-Integral Foreign currency Translation Reserve.

Q9
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Q 1 RTP Nov 18 & Nov 20

AS 11
Q 2

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Solution:

Machine Purchased Creditor

15,000 $ Paid

1-4-20 1-1-21 31-3-21 7-7-21

Exchange Rate 75 74 73

1-1-21 Purchase 11,25,000 7-7-21 Creditor (15000x74) 11,10,000

To Creditor 11,25,000 To Exchange Difference 15,000
(15,000×75) To Bank (15000x73) 10,95,000

31-3-21 Creditor 15,000 7-7-21 Exchange Difference 15,000

To Exchange Difference 15,000 To P&L 15,000

[(75-74) x15000]

31-3-21 Exchange Difference 15,000

To P&L 15,000
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Q 3

AS 11
1-1-x1 Bank 2,16,00,000
To loan 2,16,00,000
(450,000 x48)

31-3-X1 Exchange Difference 450,000 31-7-x1 Loan (450,000x 49) 2,20,50,000

To loan 450,000 To Exchange Difference 2,25,000
[ (48-49)×450,000] To Bank (450,000×49.50) 2,22,75,000

HAL
P&L 450,000 A NC P&L 2,25,000
P
UL
To Exchange Difference 450,000
H
To Exchange Difference 2,25,000

A RA
C
Q 4 Beekay Ltd. purchased fixed assets costing ₹ 5,000 lakh on 01.04.2021 payable in foreign
currency (US$) on 05.04.2022
Exchange rate of 1 US$ = ₹ 50.00 & ₹ 54.98 as on 01.04.2021 and 31.03.2022 respectively.
How it would be accounted for in the books of accounts ending 31st March, 2022.
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AS 11
Q 5 ICAI SM -TYK 7

Solution:

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AS 11
Q 6

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Q 7

AS 11
HAL
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Q 8
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Q 9

AS 11
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AS 11
61
67
63

65
65
65
65 HAL
A NC
LP
67
U
RAH
67C
A

67
61