Foreign exchange gain /loss

what entry will be pass for foreign exchange gain /loss 

 

 

Replies (3)

Entry to be passed shall depending on whether it is an integral or non integral operation. If it is an integral operation, debit to profit and Loss a/c in case of loss or credit to Profit and loss a/c in case of gain. Debit or credit the asset or liability (which is the subject of the Foreign transaction) as the case may be. In case of non integral operation, do not charge to profit & loss a/c, instead accumulate in Foreign curreny translation reserve. It is explained in detail in AS 11.

it is depending upon two situation 

1. if foreign exchange gain/loss regarding operating activities than it should be credited/debited to p&l a/c.

2.if foreign exchange gain/loss for purchase of assets then 

a.it should be capitalised as per supreme court decision.

b.it should be credited/debited to p&l a/c as per icai.

note:-if question are silent then prefered supreme court method. 

 

 

Just to add what Shrini said above:

Exchange gain and losses can be capitalised as per para 46 and 46 A of AS 11.

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