Accounting standard - 11

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Guest

Guest (Querist)

14 September 2012 Dear Sir,

I want to know the accounting treatment of change in exchange rate on letter of undertaking (letter of credit) standing in the books of account of the pvt. ltd. co. as on 31st march, 2012.

Thanks.

Amol S Joglekar

Amol S Joglekar (Expert)

14 September 2012 Is revenue recognised on 31/03/2012?

Message likes : 1 times

Guest

Guest (Querist)

14 September 2012 NO Sir, But if we apply exchange rate of 31st March, 2012 then there will Exchange Loss because the value of USD is increasing.

If we don not make payment then as per Section 43A of the Income Tax Act, 1961 no adjustment is needed in Actual Cost but I want to know whether there is any wording in AS -11 that forex loss can be booked only if we make payment.

Amol S Joglekar

Amol S Joglekar (Expert)

15 September 2012 MTM (Mark to Market) losses are required to be booked as on year end date. But in your case, that is not the case and hence I asked whether revenue is recognised??... then on "matching principle" the loss could have been booked. But if revenue is not recognised and there is no element of mark to market, the loss need not be booked. Your view is requested.

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