Classification of expense as per revised schedule vi

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Querist : Anonymous

Querist : Anonymous (Querist)

10 April 2014 If a company want to Purchase Raw Material from Foreign country, to whom remittance has to be done in Foreign Currency. The Company enters into Foreign Currency Hedging. So now, the Hedging Cost incurred by the Company should be accounted under which head?
1) Cost of Raw Material Consumed?
Since the Hedging cost is incurred for Purchase of Raw Material

OR

2) Finance Cost?

PLease Help.

Thankyou.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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10 April 2014 May be included in financial cost. Inference is from Ind AS - 2.

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Querist : Anonymous

Querist : Anonymous (Querist)

11 April 2014 But why can we not include in Cost of Raw Material Consumed?
Ultimately Hedging cost is incurred for Purchase of Raw Material.
Also AS 2 Cost of Inventory Includes Cost of Purchase & Cost of Purchase includes Expenditure directly attributable to the acquisition. So, Hedging cost incurred is Directly for Purchase of Raw Material.
So Can we not consider under Purchase Head i.e as cost of Material Consumed?

Please Guide.

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