Government of India
Ministry of Corporate Affairs
GSR: -In exercise of the powers conferred by clause (a) of sub-section (1) of the Section 642 read with sub-section (1) of Section 210A and sub-section (3C) of Section 211 of the Companies Act, 1956 (1 of 1956), the central government in consultation with the National Advisory Committee on Accounting Standards hereby makes the following amendments in the Companies (Accounting Standards), Rules, 2006, namely:-
1. (i) These rules may be called the Companies (Accounting Standards) (Second Amendment) Rules, 2011.
(ii) They shall come into force on the date of their publication in Official Gazette.
2. In the Companies (Accounting Standards) Rules, 2006, (hereinafter referred to as the said rules), in the Annexure, under the heading “B ACCOUNTING STANDARDS” , in the sub-heading “Accounting Standards (AS) 11” relating to “The effects of change in Foreign Exchange rates”, after paragraph 46, the follwoing paragraph shall be inserted, namely:-
“46A. (1) In respect of accounting period commencing on or after the 1st April, 2011, for an enterprises (such option to be irrevocable and to be applied to all such foreign currency monetary items), the exchange differences arising on reporting of long-term foreign currency monetary items of rates different from those at which they were initially recorded during the period, or reported in previous financial statements, in so far as they relate to the acquisition of a depreciable capital assets, can be added to or deducted from the cost of the assets and shall be depreciated over the balance life of the assets, and in other cases, can be accmulated in a Foreign Currency Monetary Item Transalation Difference Account” in the enterprises financial statements and amortized over the balance period of such long term assets or liablity, by recognition as income or expenses differences dealt with in accordance with the provisions of paragraph 15 of said rules.
(2) To exercise the option referred to in sub-paragraph (1), an assets or liabilitiy shall be designated as a long term foreign currency monetary item, if the asset or liability is expressed in a foreign currency and has a term of twelve month or more at the date of origination of the assets or the liability.
provided that the option exercised by the enterprises shall disclose the fact of such option and of amount remaining to be amortized in the financial statement of the period in which such option is exercised and in every subsequent period so long as any exchange difference remain unamortized.”
[F. No. 17/133/2008-CL.V]
Joint Secretary to the Government of India