Foreign Currency accounting

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This discussion covers the accounting treatment for foreign currency, specifically AED, used for business trips. The advice provided suggests booking expenses at the spot rate at the time of purchase and separately accounting for any currency valuation gains. If remaining foreign currency is held until the financial year-end, it should be revalued at the closing rate for that period.

SARATH KURIAN

SARATH KURIAN (Querist)

29 September 2022 Dear Sir,

Our directors are going to abroad for a business trip. They carried AED.20,000 to meet the expenses in cash. Once they are back, the remaining balance is AED.5000 only. Please advise on the accounting treatment.

Initial Balance - AED.20000 ( I think spot rate at the time of buying currency by the bank)
Expenses AED.15000 ( May i know, which rate we need to book the expenses)
Balance amount- AED.5000 ( Rs. 1 get gain on currency valuation, while currecy return to local bank in India)

If the company chose to hold the currency for this Fin year, which rate should i show in the accounts)

Normal business expenses

Thanks
Sarath Kurian

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

29 September 2022 Expenses AED.15000 book at spot rate buying currency.
Book gain in foreign currency separately.
Show 31st March rate in case of holding.

SARATH KURIAN

SARATH KURIAN (Querist)

30 September 2022 Noted with thanks Sir

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