Accrual of foreign revenue

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2018 Hi,

One of my clients provides services to foreign entities and the rates are agreed at foreign rate.

While passing accrual entry whether it should be in local currency or foreign currency and then convert it into local currency.

Also if i am recording the accrual entry at foreign currency then while reversing it there will be a exchange fluctuation (even though it will be very minimal), what should be the treatment and also is the fluctuation which is notional in nature allowed as per the Income tax act.

please share relevant documents or references if possible.

CA Suresh Jain

CA Suresh Jain (Expert)
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28 May 2018 All the financial (including accrual) transactions should be record In INR by converting the FX at the exchange rate prevalent on the day of transaction, unless the different rate of conversion is required to be recognised as per the law applicable, e.g. GST

Querist : Anonymous

Querist : Anonymous (Querist)

28 May 2018 Thanks !!!
So while reversing the accrual entries if the exchange rates are different, what would be the treatment for difference amount

CA Suresh Jain

CA Suresh Jain (Expert)
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28 May 2018 Reversal is required at the value at which you made the entry.

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