This document summarizes Accounting Standard 11 on the effects of changes in foreign exchange rates issued by the Institute of Chartered Accountants of India. The standard applies to firms conducting foreign currency transactions or translating financial statements of foreign operations. It defines key terms and outlines how to recognize exchange differences arising from foreign currency transactions and operations. Specifically, it states that exchange differences should be recognized as income or expenses in the period they arise, with some exceptions for non-integral foreign operations. The standard also provides guidance on forward exchange contracts and disclosure requirements in financial statements.

1. Accounting Standard-11
Effects of Changes in
Foreign Exchange Rates

2. ACCOUNTING STANDARD 11
 “THE EFFECT OF CHANGES IN FOREIGN EXCHANGE”
 Issued by the Institute of Chartered Accountanats of India
 Commencing from 1-04-2004

3. OBJECTIVE
 The Main Objective is
 To Prescribe how to include Foreign Currency
Transactions in Financial Statement
 To Prescribe how to include Foreign Operation
Transactions in Financial Statement

4. APPLICABILITY
 To the firms who are
 In Accounting Transaction in Foreign Transaction.
 Translating Financial Statements of Foreign operation.
 In Deal with Accounting of Foreign Currency
Transaction in the Nature of Forward Exchange
Contract

5.  Foreign Currency
 Foreign Operations
 Forward Exchange Contract
 Forward Rate
Definitions

6.  Closing Rate
 Exchange Difference
 Exchange Rate
 Reporting Currency

7.  Foreign Operation
Types of Foreign Operation:
 Integral Foreign Operation
 Non Integral Foreign Operation

8. Recognition of Exchange Differences
Exchange differences arising on settlement of
monetary items or reporting an enterprise’s monetary
items , at rates different from those at which they
were initially recorded during the period, or reported
in previous financial statements, should be
recognised as income or as expenses in the period in
which they arise, with the exception of exchange
differences dealt with non integral financial
operations.

9. FORWARD EXCHANGE CONTRACT
The Contract Entered to Establish the Amount of
the Reporting Currency required at Settlement Date of
Transaction.
This Contract is Entered to Minimize the Risk of
Changes in Foreign Exchange Rate
The Primium or Discount Arising Should be
Amortised as Expense or Income over the Life of
The Contract

10. DISCLOSURE IN FINANCIAL STATEMENT
 The Amount of Exchange Differences included in
the Profit and Loss Account;
 Net Exchange Differences Accumulated in Foreign
Currency Translation Reserve as a Separate
Component of Shareholders’ Funds, and
 Reconciliation of the Amount of such Exchange
Differences at the Beginning and End of the Period

11. Conclusion

12. THANK YOU