FOREIGN GAIN AND LOSS

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Query on foreign exchange gain/loss treatment in export transactions with advance USD receipts and final invoicing. Expert clarified that advances in foreign currency are non-monetary (no FX gain/loss at receipt). FX gain/loss arises at invoice adjustment and at year-end revaluation and final settlement of receivables.

Hukam Chand

Hukam Chand (Querist)
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16 January 2026 Hi CA club india experts,
i would like to know about my company is pvt ltd company and doing export business but i want to ask an question plus answer
one of my party giving me 10000USD dollar @80 rate on june 2024 and i have sell the container to my party final invoice 40000usd dollar @82 rate in September 2024 can i have to book the entry any foreign gain or loss entry in our books of account if partially advance received before selling the container if yes then in my mind confusion advance rate is locked system and no monetry item and we should not the bookd fx gain or loss entry in advance remittance m i ryt pls ela orate this issue as per law and
second scenerio is if remaining partial remmitance received in f.y. 2024-25 and balance remmitance received on after end of f.y. 24-25 then what we should have pass the fx gain or loss entry kindly suggest me for above two situation with real time example.
Thanks
Deepak

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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17 January 2026 Advance in foreign currency is a non-monetary item, hence no FX gain/loss is booked on receipt.
However, when that advance is adjusted against export invoice, the rate difference becomes forex gain/loss in P&L.
Subsequent outstanding receivables must be revalued at closing rate and final realization difference is again booked as FX gain/loss.

Hukam Chand

Hukam Chand (Querist)
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17 January 2026 I received a payment from my party ABC on 24.06.2024. As per the party advice, the party sent USD 10,000 at the rate of 82.50. However, the bank realized only USD 9,955 at the rate of 83.21 and informed us that USD 45 (at 82.50) was deducted as charges by the party’s bank.
Out of the realized amount, the bank deducted charges of ₹2,882 and credited ₹8,27,129 to our bank account.
This payment is a partial payment against Invoice No. 002 on dated 31.05.2022 which was originally raised for USD 82,759 at the rate of 76.90.
Now, please guide me on how to pass the accounting entries as per the Companies Act and Foreign Exchange Gain/Loss treatment.

Hukam Chand

Hukam Chand (Querist)
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18 January 2026 Dear expert,
Please reply for the same

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