Export Sales accounting - Date & Rate of exchange

 Hi Sunil

In my opinion 10th June

As sale transaction is complete as on that date, clearing from customs is legal formality subsequent to date of sale

Kindly let me know if anybody is of different opinion

Hema Desai

FCA, DISA

Normally export sales considered on Let export date in Exchange Control copy of shipping bill

 TT Buying Rate as on that dat

as per my opinion the treatment for Export Sales shall be as under-

1) Sales entry will be booked on Let Export Date (also called as LEO date) mentioned in Shipping Bill issued by Customs.

2) Exchange rate for calculation of sale value will be considered as per RBI Reference Rate (available on RBI site) as on LEO date.

3) actual payment may received before or after the shipment. 

4) the difference between actual remittence and sale value will be booked as exchange flactuation gain/loss.

if there is any mistake please state.

Hi sunil

In case of export sale the date of entry for sale would be the bill of lading or excahge control copy date which ever is letter. because until all the formalites of custom department are completed you can not treat it sale it may be return to you. and exchange rate would also be use for the same date

Hi sunil i am agree with dhiraj soni.....date will be that when no uncertanity involved and all risk & reward transferred

So In case of export sale the date of entry for sale would be the bill of lading or excahge control copy date which ever is letter. because until all the formalites of custom department are completed you can not treat it sale it may be return to you. and exchange rate would also be use for the same date

as per ACCONTING STANDARD what date to be considered as SALE ENTRY DATE for export company if the deal is fob or cfr?

Please inform by email on kashyap.thakkar @ yahoo.com

thanks,

In Case of Export Sales treatment in accounts, the following are the relevant sources:-

When the entry is to be done in books:-

Revenue Recognition: Accounting Standard 9

“Revenue from the sale of goods shall be recognised when all the following conditions have been satisfied:-

• The entity has transferred to the buyer the significant risks and rewards of ownership of the goods…..”

At what rate the sale is to be booked:-

Changes in Foreign Exchange rates – Accounting Standard 11

“21. A foreign currency transaction shall be recorded on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between functional currency and the foreign currency at the date of transaction”

Summary:

1. Export sales to be recorded on the date of Shipped on Board mentioned on the Bill of Lading.
2. The exchange rate, prevailing on the date of Shipped on Board to be used for conversion of amount into INR.

what should be rate in case of service provider

1.Export sales to be recognised as on date printed on Bill of lading as shiped on board date, please remember that dont use the date of issue of bill of lading.

2. some times goods transfer from dry port than sales to be recognised when SOb date printed on shhiping bill of export issued when goods loaded on dry port. as risk and reward tranfer on dry port itself.

3 Rate of  exchange taken as notified by custom authority on avg monthly basis. or RBI rate may be taken its accountig policy of concern.

as provided in AS 11 para 10. For practical reasons, a rate that approximates the actual rate at the
date of the transaction is often used, for example, an average rate for a
week or a month might be used for all transactions in each foreign currency
occurring during that period. However, if exchange rates fluctuate
significantly, the use of the average rate for a period is unreliable.

Technically  an Invoice should be raised on date when goods are loaded on the vessel for sailing

As the Bill of lading will normally have teh sailing date..

So payment becmes accrued on the date it is confirmed the goods are on vessel and export is taking place.

THe currency to be taken that prevailing on the date invoice is raised.

You have to book sales on 10th june when you raised the bill on your customer using that day's exchange rate( i.e prevailing rate on 10th june) but you should journalise the entry for proceeds on the date of actual receipt of proceeds (using prevailing rate on that day's exchange rate). difference should be exchange fluctuation loss or gain.

Hello Professionals

I have one doubt we already received full payment from Customer (Buyer in China) and delivery the goods on after receiving payments but that goods not cleared in customs

What is treatment in booking sales entry and adjustment in payment received.

Thanks in advance

With Regards

T.Purushothaman