Foreign Exchange
This query is : Resolved
09 August 2010
A party in India purchased goods from China.The invoice date in 27th Dec and the same was accounted in the month of March 2010.A what exchange rate it should be accounted?At what rate payment has to be made?
09 August 2010
It should be accounted at the forex rate as on 27th december.The rate of payment will b as on the value date,that is date of payment.
09 August 2010
So, the difference b/w accounted date & the payment date is profit or loss right?
09 August 2010
Yes the forex gain or loss is determined by the diff. between the rate of exchange as on the invoice date and as on the payment date.
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09 August 2010
thank u so much
12 August 2010
Sukanya maam,The good reached indian port in March 2010.so, logically v should account @ the rate in which it reaches indian port right?
13 August 2010
It is industry wide practice to account for the transaction as per the invoice date.
Relevant clause from AS 11 is quoted.
9. A foreign currency transaction should be recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
Relevant clause from AS 11 is quoted.
9. A foreign currency transaction should be recorded, on initial recognition in the reporting currency, by applying to the foreign currency amount the exchange rate between the reporting currency and the foreign currency at the date of the transaction.
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