Foreign exchange difference

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This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 December 2011 Dear experts,
Ours is a Unlisted Private limited company. We used import materials from outside India on credit.When we import the exchange rate of dollar will different when compared with dollar rate on payment date. How to account for such different rates. Can anyone clarify my doubt in detail & how to treat it in books of accounts.
Thanks in advance.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)

28 December 2011 The difference in payment due to change in exchange rate shall be treated as exchange loss or gain and as per AS 11, it shall be charged/vredited to the P&L Account, as the case may be.

CA Navin Jain

CA Navin Jain (Expert)

28 December 2011 AS PER AS-11. SUCH DIFFERENCE SHALL BE CHARGED TO PROFIT AND LOSS ACCOUNT, HOWEVER AS PER AMENDMENT OF COMPANIES (ACCOUNTING STANDARD RULES-2009) SUCH DIFFERENCE UPTO 31.3.2011 SHALL BE CHARGED TO FIXED ASSETS.

HENCE THERE WAS TWO TREATMENT OF THE DIFFERENCE UPTO 31.3.2011, AND POLICY USED BY THE COMPANY MUST BE DISCLOSED BY NOTES TO ACCOUNTS.

Now, AS REVISED SHEDULE-VI IS APPLICABLE FROM 01.04.2011 AND ITS CLEAR IN THE REVISED SHEDULE THAT ALL ACCOUNTING STANDARD SHALL PREVAIL TO ALL CLOSE OF REVISED SHEDULE-VI.

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