Foreign exchange fluctuation

Stat Audit 1566 views 2 replies

Dear All,

One of my clients have purchased spare parts for the machinery by paying 100% advance for the same.

The bill is booked subsequently by using the exchange rate of the day when the goods are received. The difference in the payment and booking is treated as Forex Loss.

My query is shld the Client book the bill at the rate of payment i.e. which does not result in forex fluctuation, since the outflow have been fixed.

Please reply in reference to AS 11.

Will be helpful if proper 'paras' are qouted.

Thanks  Regards

Replies (2)

Accounting of forex loss is proper. 

however, if the tax invoice and the payment date is same , then you have an option to book the entry on the same date, but, accounting entries related to forex gain & loss should also be in line with the policy generally adopted by the company in its regular course of business.

I have also the same case with our client firm.Still not clear about this.  


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