Foreign exchange fluctuation

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2012 Our co. has import transactions but records its foreign exchange fluctuations under the head of 'Purchase import' and in the balance sheet adjust this amount with purchase.....whether it is correct treatment?In my view it is not correct....pls share ur views.....

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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22 September 2012 Accounting treatment followed is not correct.
Fluctuation,in this case, may be routed through 'exchange fluctuation a/c' instead of 'purchase import'a/c.

Querist : Anonymous

Querist : Anonymous (Querist)

22 September 2012 Yes sir mine view is same as you and when i asked vice president about the same that why foreign exchange fluctuation are not reorded properly then he replied that it would attract 3CD reporting......

CA Amit Talada

CA Amit Talada (Expert)
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23 September 2012 As per my view, exchange difference due to foreign exchanges for import transaction should not be accumulated and should be transferred to P & L Account. its a foreign transaction and not a foreign operation...accumulation is allowed in foreign operation which may be integral or non integral.

Querist : Anonymous

Querist : Anonymous (Querist)

24 September 2012 Thank u so much for the reply.....mine view are same as both of you replied......i just want to know the penal provisions for such type of companies which are not following correct mechanism....

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