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Export Sales accounting - Date & Rate of exchange

Chartered Accountants


Hi Friends


When the sales which are exported shall be accounted and rate of exchange of which date should be taken for accounting purpose?


To illustrate, the sales invoice is raised on 10-06-08 in USD on US customer. The documents are verified by custom authorities and Bill of Ladding is prepared on 13-06-2008. The goods are actually despatched from the Mumbai custom port to US on 14-06-08. 


Now my questions are below:


1. On which date the Sales entry should be passed in the books of account?


2. Which date's rate of exchange should be taken for ascertaining the INR value? Is it the exchange rate on Invoice date (10-06-08)  OR  is it the exchange rate on the date of Bill of Ladding (13-06-08) ?


Please clarify and provide the rationale for the same.


Regards


Sunil Nayak.


 


 


 


Total thanks : 2 times

 
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PRACTICING CA AND ENTERPRENEUR

 Hi Sunil

In my opinion 10th June

As sale transaction is complete as on that date, clearing from customs is legal formality subsequent to date of sale

 

Kindly let me know if anybody is of different opinion

Hema Desai

FCA, DISA

 
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Manager - Accounts & Commercial

Normally export sales considered on Let export date in Exchange Control copy of shipping bill

 
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Further to add to question posed by Mr. Sunil, which exchange rate should be used? The rate notified for the particular month by the customs authorities or the TT Buying Rate of our Bank as on the particular date? Regards Sanjay Govil

 
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PRACTICING CA AND ENTERPRENEUR

 TT Buying Rate as on that dat

 
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Originally posted by :Sunil Nayak
" Hi FriendsWhen the sales which are exported shall be accounted and rate of exchange of which date should be taken for accounting purpose?To illustrate, the sales invoice is raised on 10-06-08 in USD on US customer. The documents are verified by custom authorities and Bill of Ladding is prepared on 13-06-2008. The goods are actually despatched from the Mumbai custom port to US on 14-06-08. Now my questions are below:1. On which date the Sales entry should be passed in the books of account?2. Which date's rate of exchange should be taken for ascertaining the INR value? Is it the exchange rate on Invoice date (10-06-08)  OR  is it the exchange rate on the date of Bill of Ladding (13-06-08) ?Please clarify and provide the rationale for the same.RegardsSunil Nayak.    "


 

as per my opinion the treatment for Export Sales shall be as under-

1) Sales entry will be booked on Let Export Date (also called as LEO date) mentioned in Shipping Bill issued by Customs.

2) Exchange rate for calculation of sale value will be considered as per RBI Reference Rate (available on RBI site) as on LEO date.

3) actual payment may received before or after the shipment. 

4) the difference between actual remittence and sale value will be booked as exchange flactuation gain/loss.

if there is any mistake please state.

 
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Hi sunil

In case of export sale the date of entry for sale would be the bill of lading or excahge control copy date which ever is letter. because until all the formalites of custom department are completed you can not treat it sale it may be return to you. and exchange rate would also be use for the same date


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Chartered Accountant


Hi sunil i am agree with dhiraj soni.....date will be that when no uncertanity involved and all risk & reward transferred

So In case of export sale the date of entry for sale would be the bill of lading or excahge control copy date which ever is letter. because until all the formalites of custom department are completed you can not treat it sale it may be return to you. and exchange rate would also be use for the same date


Total thanks : 3 times

 
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as per ACCONTING STANDARD what date to be considered as SALE ENTRY DATE for export company if the deal is fob or cfr?

Please inform by email on kashyap.thakkar @ yahoo.com

 

thanks,

 
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Chief Manager (Accounts) at Vardhman Polytex Ltd.(unit-Vinayak Textile Mills) Ludhiana

 

In Case of Export Sales treatment in accounts, the following are the relevant sources:-

 

When the entry is to be done in books:-

 

Revenue Recognition: Accounting Standard 9

“Revenue from the sale of goods shall be recognised when all the following conditions have been satisfied:-

  • The entity has transferred to the buyer the significant risks and rewards of ownership of the goods…..”

 

At what rate the sale is to be booked:-

 

Changes in Foreign Exchange rates – Accounting Standard 11

“21. A foreign currency transaction shall be recorded on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between functional currency and the foreign currency at the date of transaction”

 

 

Summary:

 

  1. Export sales to be recorded on the date of Shipped on Board mentioned on the Bill of Lading.
  2. The exchange rate, prevailing on the date of Shipped on Board to be used for conversion of amount into INR.


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