Loss in foreign exchange
This query is : Resolved
15 February 2013
Dear Experts
Good day and greeting
Your expert advice is seeking on the below mentioned matter .
We are in contract with the Swedish Bank , that financed one of our machine of 70000 EURO. In term we accepted 10 Bills of Exchange payable quarterly .
My question is how the loss in the foreign exchange will be accounted for this loss .
Either by :
1)Debiting Machinery account with the amount , or
2)Debiting Profit and loss with the loss.
Your suggestion on this matter will be highly appreciated .
Thank & Regard
Good day and greeting
Your expert advice is seeking on the below mentioned matter .
We are in contract with the Swedish Bank , that financed one of our machine of 70000 EURO. In term we accepted 10 Bills of Exchange payable quarterly .
My question is how the loss in the foreign exchange will be accounted for this loss .
Either by :
1)Debiting Machinery account with the amount , or
2)Debiting Profit and loss with the loss.
Your suggestion on this matter will be highly appreciated .
Thank & Regard
CA. RAGHAV GARG
(Expert)
16 February 2013
Dear Shambhu,
The Machinery is to be booked at the agreed rate specified in Invoice of Machinery added by any commission, Freight, Insurance paid.
However, it seems in your case that you are facing loss due to forex fluctuation, which is more of a finance Cost and is therefore can be direct debited to O&L account with as Forex Loss
The Machinery is to be booked at the agreed rate specified in Invoice of Machinery added by any commission, Freight, Insurance paid.
However, it seems in your case that you are facing loss due to forex fluctuation, which is more of a finance Cost and is therefore can be direct debited to O&L account with as Forex Loss
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