Presentation of Financial Statements issued by ICAl which states as follows: *An asset is a resource controlled by the enterprise as a result of past events from which future economic benefits are expected to flow to the enterprise. Since the balance in FCMITDA represents foreign currency translation loss, it does not meet the above definition of asset' as it is neither a resource nor any future economic benefit would flow to the entity therefrom. Therefore, such balance cannot be reflected as an asset. Accordingly, the Council decided that debitor credit balance in FCMITDA should be shown on the "Equity and Liabilities" side of the balance sheet under the head Reserves and Surplus' as a separate line item. Paragraphs 46 for entities other than Companies 46 (1) In respect of accounting periods commencing on or after December 2006 (such option to be irrevocable and to be applied to al such foreign currency monetary items), the exchange differences arising on reporting of long-term foreign currency monetary items at 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 asset, can be added to or deducted from the cost of the asset and should be depreciated over the balance life of the asset, and in other cases can be accumulated in a "Foreign Currency Monetary Item Translation 06 Difference Account in the enterprise's financial statements and amortized over the balance period of such long-term asset or liability, by recognition as income or expense in each of such periods, with the exception of exchange differences dealt with in accordance with the provisions of paragraph 15. (2) To exercise the option referred to in sub-paragraph (1), an asset or liability shall be designated as a long-term foreign currency monetary tem, if the asset or liability is expressed in a foreign currency and has a term of twelve months or mare at the date of origination of the asset or the ability: Provided that the option exercised by the enterprise should disclose the fact of such option and of the amount remaining to be amortized in the financial statements of the period in which such option is exercised and in every subsequent period so long as any exchange difference remains unamortized." Hlustration 14 Option Ltd. is engaged in the manufacturing of steel For its steel plant, it required machineries of latest technology. It usually resorts to Long Term Foreign Currency Borrowings for its fund requirements. On 1st April, 2011, it borrowed US $1 million from International Funding Agency, USA when exchange rate was 1$ = 252. The funds were used for acquiring machineries on the same date to be used in three different steel plants. The useful life of the machineries is 10 years and their residual value is 20,00,000. Earlier also the company used to purchase machineries out of foreign borrowings. The exchange differences arising on such borrowings were charged to profit and loss account and were not capitalised even though the company had an option to capitalise it as per notified AS 11 (notification issued by the MCA in 2009). Now for this new purchase of machinery, Option Ltd, is interested to avail the option of capitalising the same to the cost of asset. Exchange rate on 31st March, 2012 is 1 US $ = 51. Assume that on 31 March, 2012, Option Ltd. is not having any old Long term foreign currency borrowings except for the amount borrowed for machinery purchased on 14 April, 2011 Can Option Ltd. capitalise the exchange difference to the cost of asset on 31st March, 2012? If yes, then calculate the depreciation amount on machineries as on 31 March, 2012