Treatment of forex fluctuation
This query is : Resolved
27 May 2014
(1) When Invoice is raised in USD, the entry will be:
USD @ 60
USD INR
Dr. Debtor 1,000 60,000
Cr. Sales 1,000 60,000
(2) On receipt of the amount, the entry will be: USD @ 62
USD INR
Dr. Bank 1,000 62,000
Cr. Debtors 1,000 60,000
Cr. Forex Gain (Realised) - 2,000
Is it correct to recognize the Gain as realised Gain?
USD @ 60
USD INR
Dr. Debtor 1,000 60,000
Cr. Sales 1,000 60,000
(2) On receipt of the amount, the entry will be: USD @ 62
USD INR
Dr. Bank 1,000 62,000
Cr. Debtors 1,000 60,000
Cr. Forex Gain (Realised) - 2,000
Is it correct to recognize the Gain as realised Gain?
27 May 2014
yes treatment is correct
28 May 2014
But when the amount is credited in EEFC Account, it will be in Foreign currency. Then how can it be Realised gain?
Only when USD is conveted into INR, the Forex fluctuation comes.
Only when USD is conveted into INR, the Forex fluctuation comes.
29 May 2014
when monies are credited from EEFC account to your local account, you know the Foreign exchange rate then you should account for gain accordingly or if monies lying at the year end in EEFC account then you need to recognise the same by converting the balance at the prevailing rate at the year end date and recognise gain accordingly.
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