An importer firm M/S XYZ has availed foreign loan (Buyers Credit) of $ 81064.25 from J.P.Morgan Chase Bank NA, Singapore on 16.11.2011 for the period from 16.11.2011 to 15.05.2012 for import of goods to be sold in local market. Total interest cost for the said period on the loan comes to $ 1045.73. Total principal & interest to be paid on 15.05.2012 is $ 82109.98 + withholding tax . The exchange rate as on 16.11.2011 was $1 = Rs. 50.88. This rate has been applied while recording the transaction on 16.11.2011. Exchange rate on 31.03.2012 was $1 = Rs. 50.87. following is my quarry.
- Necessary entries to be passed for recording of above transaction.
- Treatment of interest cost as on 31.03.2012 & necessary entries thereof as the AS-11 is silent about interest cost.
- Necessary entries to record exchange difference in light of AS-11.
Please provide valuable suggestion at the earliest.
CAclubindia
