As-11

2nd entry is correct...

II nd entry is correct and the amount of Rs.20000/- is your exchange rate gain which is the invisible profit to the  company and vice-versa.

is there any such illustration in any book so that i can support the answer because i am finding it difficult to convince the client who is insisting that there will be no exchange fluctuation.

the entries to be made are 

1. advace given to suppliers DR             450000

      To   Bank                                                                450000

(Being advance given to supplier for supply of material)

2.   the following entry has to be passed on the date the material has been perchased from him 

a. first entry should be for exchange gain on monetory item ie advace given to supplier 

                         adv given to supplier DR             20000

                          exchange gain on forex transaction         20000

b. the entry for purchase of material is 

                     purchase                      dr       470000

                     To   Adv given to sup                              470000

The above answers seems to be wrong. We have to see the definition of Monetary item, which only require restatement. Any advances for purchase of raw material or capital items are not monetary items since you do not get fixed determined amount of money. Therefore, there is no requirement to restate advances paid for raw material and therefore inventory will get accounted at Rs 450,000. There is an EAC opinion from ICAI to support this. The position is same in IFRS as well.

Hope this clarifies.

Regards, Yogesh Singhal

where i can get that EAC opinion. please give that EAC opinion for more calrity 

yogesh can u please give me the link of eac text

thanks in advance