Exchange Fluctuation

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Srinivas Sharma KN (Querist)
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14 February 2008 How to Calculate Exchange Fluctuation on Foreign Currency Account (Ex. EEFC)? As I understand it, rate at which the transactions are made during the year should be compared with the reinstated rate at the beginning of the year and exchange differences should be arrived. At the every year end, it should be reinstated at the closing rate. Am I right? If not, then how?

jegannath G

jegannath G (Expert)
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14 February 2008 you are correct. The exchange fluctuation between the revalued rate & the exchange rate prevailing at the end of the year. This treated as exchange fluctuation expenses / gain

Srinivas Sharma KN

Srinivas Sharma KN (Querist)
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15 February 2008 Thanks for the reply. But, we have to account also for the exchange difference for the transaction made during the year also by comparing the spot rate with reinstated value at the beginning of the year. Correct?

CA. Kirti S. Ganatra

CA. Kirti S. Ganatra (Expert)
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15 February 2008 You are correct. For transaction completed during same financial year will be net out and find out difference in exchange rate. For transaction which are not completed as on 31st March apply that day rate and book that difference in Books

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