Author : Anonymous
( Author )
05 July 2012
I am Lakshman from Hyderabad, working in CA firm. Presently we are finalizing the books of accounts of Software company which is one of our clients.
The software company is 100% EOU. They do rise invoice at the end of month for what amount they received in respective month. For example in the month April '2011, they had received USD 50,000 @ 43.67/usd, USD 60,000 @ 44.24/usd respectively into EEFC account. We had booked invoice at the end of April '11 is 1,10,000 USD @ 43.90/usd. The difference between USD rates treated as Foreign Exchange Loss/Gain. So that there would be no payable/receivable to/from Foreign client.
Foreign Client deposited the amount in our client's EEFC account. Our client every time do transfer to INR bank account when the funds required or when the doller rate is high.
QUERY: Here my query is does we need to account the foreign exchange gain/loss in the conversion time also? If so, how to account for.
Actually we do account for Conversion loss as debit the "Forex Loss" and credit "EEFC a/c" , and reverse entry for gain. The problem is at the end of 31st March '2012 there is huge "Dr" balance in "EEFC a/c". But in real there was no balance as per EEFC a/c bank statement.
So please do advise for above query.
Thanks in advance.