Foreign exchange fluctuation

Hello Everyone,

Need some help on one of the basic concepts in accounting.

We have a foreign currency loan in our books of Accounts. This loan was carried forward from FY 2012-13.

Amount of loan - say USD 1.

At the time of closure of accounts on Mar 31, 2013 it was valued on the closing rate prevailing on 31, Mar 2013 say Rs 55/USD.

During the FY 2013-14, company have earning in foreign currency and has paid this foreign currency loan through its EFC account on 30.06.2013 (on this date rate of exchange was Rs 60/USD).

Now, is it required to book the currency loss/gain arrising due to rate fluctuation (ie Rs 5 loss) between 31, Mar 2013 and 30, June 2013 even though the foreign currency loan was repaid in foreign currency only??

 

 

 

Replies (2)

Dear Vinayak,

It is mandatory to book the forex loss of Rs 6. Even in case where accouting standard is not applicable to your organization, this loss should be booked as in absence of same your books will not show "true & fair position".

forex loss or gain must be shown in books

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