Ind AS 21 | Handling Foreign Exchange Gains/Losses from Payables for Capital Goods/Services

For long-term foreign currency payables or monetary items recognized under AS 11 and for which the Company has opted for exemption under Ind AS 101, the other provisions of Ind AS 21 are not applicable. Consequently, if the company has appropriately applied the requirements of AS 11, it may continue to capitalize the exchange differences resulting from the translation of long-term foreign currency payables or monetary items into the cost of depreciable assets, as outlined under Ind AS 101.

In this story, the accounting treatment of foreign exchange fluctuations of the company, which is still in construction, commercial operations of a particular project that it had commenced prior to the adoption of Ind AS is discussed taking into account the Expert Advisory Committee’s (EAC) opinion on the matter i.e. whether the foreign exchange fluctuations related to transactions and translations of payables for capital goods/services are accounted for by transferring them to the project’s Capital Work in Progress.

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