Foreign Exchange Loss

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Dharmesh k. Dubey (Querist)
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06 November 2009 Dear Sir Nd Friends ,

while valuing the Creditors at the end of the financial year at the closing rates of currency the company reports a foreign exchange loss , wat wud b the effect of this loss on the o/s balance of creditors , will it b added to their balances nd then shown in the b/s ?

thnx in advance .

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 November 2009 Pl see companies (Accounting Standards) Amendment Rules,2009 in the following link.
https://www.caclubindia.com/notice_circulars/notice_list_detail.asp?notice_id=1918

CA Anand Sarda

CA Anand Sarda (Expert)
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06 November 2009

Suppose creditor is shown on purchase date as
Purchases a/c. dr (1000*46).....46000
to Sundry Crs 46000

The Following 2 entries are passed at the end of the yr when Exchange rate is 48.

Prov for Loss on Foreign Ex A/c..Dr 2000
to Sundry Cr 2000

PL Dr.................... 2000
to Prov for Loss on FE 2000

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)
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06 November 2009 Respected Warrier Ji,

what happens if the asset or liability is not a long term foreign currency monetary item. as creditors is a current liability and in most of the cases the age og a creditor is far less than 12 months.

Please express your valuable opinion.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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06 November 2009 Sanjay Sir
In that case Mr. Anand Sarda's view can be adopted.

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