Company X has given an advance of USD 1000 for an import puchase (ex rate - Rs.40/USD) on 01.04.08. Later it received an invoice for USD 1000 on 01.05.08(ex rate - Rs.45/USD. For what INR the purchase should be accounted? Is there any foreign exchange gain/loss.
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AS-11
Replies (2)
The exchange rate on the date of bill of lading (For purchase on FOB contract) should be used for accounting for purchase. Thereafter if there is a variation it should be expensed to P&L account as exchange loss.
"As per AS 11-transactions should b converted at closing exchnge rate at the period end , however if the rate is unrealistic then the transaction may be converted at the rate which is realizable."
here when can the rate be unrealistic.
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