Exchange(foreign)

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ajay (Querist)
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30 March 2016 Example

Mr. X(Importer India) is given advance with Exchange rate(61.47/$7600 and 61.82/$27650 two times paid) in PY(2014-15) to Mr. Y(Exporter chaina) and final amount paid in CY(2015-16) with Exchange rate(65.055/$3800). now how will calculate exchange loss or profit, how will shown in our accounts that exchange profit or loss and what is the asset value.

Amol S Joglekar

Amol S Joglekar (Expert)
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30 March 2016 where comes the question of profit or loss.... the purchase is for self use/consumption. No? The cost of the inport would be booked at actual rupee value spent.

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ajay

ajay (Querist)
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30 March 2016 Yes that asset was for self use only.
but as per AS 11 the asset was recorded at closing rate(at the date on closing year) or at the time purchase rate. but in my problem i have given advance to Exporter in two times(PY) then at what rate asset was recorded? and is their is any profit or loss? please give some clarificatiion

Amol S Joglekar

Amol S Joglekar (Expert)
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31 March 2016 The asset will appear at Actual Cost.
AS 11 is NOT applicable in your case. It is meant for FORWARD exchange contract.
Yours is a straight case of payment as per the prevailing exchange rates. In that case there arises no any question of profit/loss due to exchange rate fluctuations

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