( Author )
04 February 2013
In the instance case, the assessee is a corporate listed at the exchange.
While accounting for imports:
1) there is an advance payment to the foreign party in foreign currency,
2) while booking the purchases, i.e squaring the foreign party on date of receipt of purchases, the assessee instead of stating the purchases at the current date (date of receipt of purchases) and passing the difference through foreign exchange gain /loss a/c, squares the foreign party's a/c with the amount of advance payment , thereby not affecting the foreign exchange gain /loss a/c.
Is this method of accounting correct ? If not please suggest.