Related to accounting standard 11

This query is : Resolved

Vivek (Querist)
Follow

02 June 2012 sir,
I have a query regarding foreign exchange difference to be charged in profit and loss account.

Example:
a company is purchasing goods from local as well as from foreign countries.
suppose a company have purchased goods from Malaysia purchase invoice - 80000$
advance payment 30% - 24000 @ 45.99 rs 1103760
balance payment 70% - 56000 @ 46.59 rs 2609040
rate of $ 45.99 and 46.99 are as per bank advice provided by bank during payment.

1) company is recording the transaction by using 46.59 rs per $ rate for full bill. I.e 80000 @ 46.59 rs per $(80000 @ 46.59 = 3727200)(3727200-1103760-2609040 = 14400 charging toward foreign exchange difference in books of accounts
or taking an average of both the rates (45.99+46.59/2)for recording purchase in books of accounts

Question:
what would be the actual policy followed by company in the above case?

Sanjay Chauhan (IFRS)

Sanjay Chauhan (IFRS) (Expert)
Follow

02 June 2012 Account for the transaction on the date of purchase by using that day's spot rate and credit liability.

Any difference arisng on advances or outstanding amount is to be taken to P&L.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now

Summarize this with AI

ChatGPT Perplexity Claude Google AI Grok