Rule 115(2)
This query is : Resolved
24 December 2011
Respected Experts,
Pls Guide me on the following,
If a foreign debtor has a balance standing as on 31st march 2011, as per rule 115(2) & AS of ICAI we need to state the balance in our books at the rate prevaling as on 31st march'11 and the difference is to be transferred to Foreign Exchange fluctuation a/c. But whether there is any neccesity as per i.t. rules or ICAI St that the difference transferred l.y. is to be reversed in the following Year.
Pls Guide me on the following,
If a foreign debtor has a balance standing as on 31st march 2011, as per rule 115(2) & AS of ICAI we need to state the balance in our books at the rate prevaling as on 31st march'11 and the difference is to be transferred to Foreign Exchange fluctuation a/c. But whether there is any neccesity as per i.t. rules or ICAI St that the difference transferred l.y. is to be reversed in the following Year.
24 December 2011
Reversal is not required. On receipt of actual payment, the difference ,if any, arises , has to be transferred to FE Fluctuation A/c.
24 December 2011
Respected sir,
Thank u for the reply,
But Pls Explain whether the profit or loss that arises on FE Fluctuation wont be contingent Profit/Loss? since such profit/Loss is not crystallised but is only transferred for reporting purpose only
Thank u for the reply,
But Pls Explain whether the profit or loss that arises on FE Fluctuation wont be contingent Profit/Loss? since such profit/Loss is not crystallised but is only transferred for reporting purpose only
24 December 2011
Reporting the financial statements to the extent these show true and fair view of the affairs of the company on the Balance sheet date , is the prime motive behind this whole exercise.
.
Once the policies are followed consistently
the ultimate result would be one and the same.
.
Example- Valuation of closing stock...
Stock is valued by following any method but it can not be said that the valuation so arrived does not contain any element of profit or loss. The real profit can be arrived only when the inventory is zero.
But for a going concern it is not possible to have zero inventory. The problem finds its solution by adopting a recognised valuation method consistently.
.
Once the policies are followed consistently
the ultimate result would be one and the same.
.
Example- Valuation of closing stock...
Stock is valued by following any method but it can not be said that the valuation so arrived does not contain any element of profit or loss. The real profit can be arrived only when the inventory is zero.
But for a going concern it is not possible to have zero inventory. The problem finds its solution by adopting a recognised valuation method consistently.
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