Foreign exchange transaction
This query is : Resolved
23 July 2012
what is the treatment of foreign exchange transaction? i face the following problem in my audit work please solve the problem...problem is "Company doing software work to foreign companies having only foreign receipts no other income,company raise invoice for one month (ex for the month of apr11 raised in may11) at exchange rate on the date of invoice raised.Foreign company directly deposited to our bank account(no detailes about amount relating to current bill or previous bill,at sme time no details about what exchange rates taken)(opening balance pending)"what is the exchange rate for determine exchange loss.
thanks & regards,
thanks & regards,
23 July 2012
As far as I am aware , there are certain Provisions for IT companies specifically in this regard.
But yes one thing is for sure they need to provide you with the exchange rates at which these invoices were booked and realised. It is not automatic, you need to ask them the source of pulling the exchange rates.
and for determining Exchange Loss:
Invoice rate(rate on the date of invoice)
LESS: Income (bank , rate on the date of receipt)= Exchange Loss/Gain.
But yes one thing is for sure they need to provide you with the exchange rates at which these invoices were booked and realised. It is not automatic, you need to ask them the source of pulling the exchange rates.
and for determining Exchange Loss:
Invoice rate(rate on the date of invoice)
LESS: Income (bank , rate on the date of receipt)= Exchange Loss/Gain.
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