(debtor) it is more than six month or less than six month

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uday singh Negi (Querist)
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25 March 2013 dear sir,

suppose a company has a foreign client (debtor )

and his outstanding is suppose ( rs. 1,00,000/- USD 2000)

it is pending since 2009-10

now every year we revalued the amount , suppose in f.y 2012-13

we revalued that much amount and now it comes to rs. 105000/-
( rs. 5000 is exchange gain )

so when we prepare debtor more than six month and less than six month

rs. 5000/- shall we show in less than six month or
it will be more than six month

i think this should go under more than six month because

their is no transaction at all during the year this 5000/- comes through revaluation

uday singh Negi

uday singh Negi (Querist)
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17 May 2013 expert pls reply

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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14 July 2024 In accounting terms, when you have a foreign client with an outstanding amount and you revalue it annually due to currency fluctuations, the treatment of exchange gain or loss depends on whether it falls under "more than six months" or "less than six months" category in the debtor aging analysis. Here’s how you should categorize the exchange gain of Rs. 5,000:

### Understanding the Scenario:
1. **Original Outstanding:**
- In FY 2009-10, the outstanding amount was Rs. 1,00,000 (USD 2,000).

2. **Revaluation:**
- By FY 2012-13, due to currency fluctuations, the revalued outstanding amount is Rs. 1,05,000 (including Rs. 5,000 exchange gain).

### Categorization for Debtor Ageing:
- The debtor ageing analysis typically categorizes amounts based on how long they have been outstanding, usually into buckets like "current", "30-60 days", "61-90 days", "more than 90 days", etc.

### Treatment of Rs. 5,000 Exchange Gain:
- Since the Rs. 5,000 exchange gain is a result of revaluation and not due to a transaction or receipt of payment, it should generally be treated as part of the outstanding amount that is more than six months old. Here’s why:

- **More than Six Months Category:** This category usually includes amounts that have been outstanding for a prolonged period, regardless of whether they have been revalued or not. The exchange gain represents an unrealized gain due to the change in the exchange rate, indicating the amount has been outstanding for an extended period.

- **Less than Six Months Category:** This category typically includes recent transactions or amounts that have been outstanding for a shorter period. Since the exchange gain is not related to recent activity or transactions, it would not belong in this category.

### Conclusion:
When preparing the debtor ageing report:
- **More than Six Months Category:** Include the entire outstanding amount of Rs. 1,05,000, which includes the Rs. 5,000 exchange gain.
- **Less than Six Months Category:** Exclude the Rs. 5,000 exchange gain from this category.

This treatment ensures accurate reporting and reflects the true status of the debtor’s outstanding amount in relation to aging. Always ensure to follow consistent practices and adhere to accounting standards applicable in your jurisdiction for such matters.

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