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Import payments accounting

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Querist : Anonymous

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Querist : Anonymous (Querist)
20 September 2011 Hi,

I received one USD invoice for USD1000 in the month of Sep 2011 (USD RATE 45), invoice dated March 11.

I am going to pay the vendor on Oct 11 (USD rate 46)

There is the different in USD rates.

What was the entry and adjustment I have to pass?
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CA Siddhartha Bhardwaj

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CA Siddhartha Bhardwaj (Expert)
21 September 2011 Para 9 of AS 11 provides that foreign currency transactions should be recorded at the exchange rate prevailing on the date of the transaction.

Para 12 of AS 11 provides that payables are examples of monetary items.

Also, Para 13 provides that exchange difference arising on settlement at rates different from those at which they were initially recorded should be recognised as income or expense.

Accordingly the treatment will be as under:

Exchange DifferenceDr. Rs. 1,000/- (1000*1)
To Payables Rs. 1,000/-

Payables Dr Rs. 46,000/-
To Bank Rs. 46,000/-
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CA Pushpendra Gaur

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CA Pushpendra Gaur (Expert)
29 September 2011 The expert entries are absolutly right
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