22 April 2009
This relates to accounting for Unbilled Revenue where transaction takes place in foreign currency (USD). Scenario goes like this: ABC Ltd. is a service provider having number of domestic and foreign clients. It does billing to Z Co. Ltd in USD while base currency for ABC continues to be INR.
As per Billing cycle, the bill to Z Co. shall be raised on 15th April 09 for work done for the period Jan'09 to Feb'09. ABC wants to put entries for Unbilled Revenue on a monthly basis (Jan to Mar). In this example billing for each month is $1000 (Jan to Mar) and for that of Apr is $500 (till 15th Apr). Also, the currency conversion rate is different at all month ends (as on 31st Jan Rs.45, 28th Feb Rs.47, 31st Mar Rs.46 and 15th Apr (Rs.50). Please help me with the accounting entries for the Unbilled Revenue, complying with the Indian Accounting Standards and business scenario.
Following is what our system is doing right now which seems to be bit dicey:
Accrual 31st Jan Unbilled AR Dr. $1000 Rs.45000 Conversion Rate - Rs.45 Revenue Cr. $1000 Rs.45000
Reversal 1st Feb Revenue Dr. $1000 Rs.45000 Unbilled AR Cr. $1000 Rs.45000
Accrual 28th Feb Unbilled AR Dr. $2000 Rs.94000 Conversion Rate - Rs.47 Revenue Cr. $2000 Rs.94000
Reversal 1st Mar Revenue Dr. $2000 Rs.94000 Unbilled AR Cr. $2000 Rs.94000
Accrual 31st Mar Unbilled AR Dr. $3000 Rs.1,38,000 Conversion Rate - Rs.46 Revenue Cr. $3000 Rs.1,38,000
Reversal 1st Apr Revenue Dr. $3000 Rs.1,38,000 Unbilled AR Cr. $3000 Rs.1,38,000
And Finally, the actual billing happens on 15th April. Nowhere in the above flow of transaction does Currency Exchange Gain/Loss appears which seems to be incorrect. Please guide with appropriate accounting of the above transaction.
22 April 2009
person can enter those bill when they issued in the month or period in which service rendered befor finalisation of accounts and debtors should be booked at intioal rate of a period in which service rendered and show these debtors in balance sheet at closing date rate provide difference in p&l as profit/ loss
22 April 2009
person can enter those bill when they issued in the month or period in which service rendered befor finalisation of accounts and debtors should be booked at intioal rate of a period in which service rendered and show these debtors in balance sheet at closing date rate provide difference in p&l as profit/ loss
CAclubindia
