if 100$ paid as advance to emplooye by purchasing at the rate of 45 but expense made is $100 on the day on which exchange rate is 47 whether exchange loss arises in such case? since advance is made in $ currency and expense also made in $ currency.
Please quote basis of ur opinion.since my client booked exchange loss
YES BOOK FORIEGN EXCHANGE LOSS
Mr Navin
I dont think that there is any exchange Loss.
Only expense will be booked @ 45*100.
Could you explain me why this loss should be recognized
Yes Rahul Agree with You no loss exist.
exchange loss
Mayank,
1. JE on making the advance:
Advance A/c............Dr 4,500
To Cash A/c 4,500
2. On incurring the expense
Expense A/c............Dr 4,700
To Advance A/c 4,500
To Exchange gain A/c 200
So the net expense in the income statement is Rs.4500.
CAclubindia
