We have paid 100% advance INR 1000000 for import of capital goods on 15.4.2011. We receive the invoice from the foreign supplier on 15.5.2011. for which INR works out to 1,05,000 due to exchange fluctuation. What is the valid accounting treatment? Is the treatment differ for rawmaterial import?
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Exchange fluctuation
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Increase in payble to foreign supplier amount of Rs.105,000 charged to P& L A/c in case of purchase of Raw materials, also in case of Capital Assets that increse amount of Rs.105,000 charged to Fixed Assets.
Pls refer this link...... https://220.227.161.86/eac/eacfinal/vol28/37.html
No foreign exchange exposure as the entire cost of the raw materials was paid as an advance. Any exchange fluctuation in future has no impact on the income statement.
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