Accounting of import transactions and its implications

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Suraj S (Querist)
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14 October 2011 Let me explain my understanding of a situation of importing and its AS - 11 implications:
1. The party has to pay the supplier in advance and this will be valued as per the exchange rate on which the payment has been made from the bank. for eg: paid Rs. 1,00,000.00 in advance to China
2. When the goods are imported the purchase has to be accounted on the basis of customs valuation. for eg: the customs valuation of the goods came to Rs. 95,000.00 only
3. The balance Rs. 5,000.00 is accounted in Foreign Exchange Loss and this A/c will be shown in the debit side of P&L A/c.
Now am i right in the above mentioned accounting entries?
Also, while preparing costing records, which amount should i take as purchase cost ? Rs. 1,00,000.00 or Rs. 95,000.00?

Vishal D Shah

Vishal D Shah (Expert)
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17 October 2011 You are incorrect in accounting purchases. your invoice value should be accounted and not custom valuation. Difference in invoice value and actual remittance shall be your realised forex gain.

Suraj S

Suraj S (Querist)
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17 October 2011 Thank u sir,
therefore, the invoice value has to be accounted as purchases on the exchange rate of the date of Bill of Entry or the Invoice Date ?

Suraj S

Suraj S (Querist)
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17 October 2011 Thank u sir,
therefore, the invoice value has to be accounted as purchases on the exchange rate of the date of Bill of Entry or the Invoice Date ?