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Import purchse accounting

navinkumar naicker (Article) (419 Points)

20 March 2013

Hellooo Caclubindia,

pls let me know in detail the entire process to book an import purchase in the books with respect exchange rate, duties payable & foreign exchange loss/profit .

Best regards

navin.

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3 Replies

Ganeshbabu K (Audit and Tax Advisory) (48564 Points)
Replied 20 March 2013

Import purchases

exchage rate = bill of entry custom exchange rate

date of booking may be bill of entry date / MRN date/inv date as the case may be

it all depends on your purchase terms(Wheher it is ex-works, or FOB, CIF)

what ever it is

transaction of import should be recognised when all risks and rewards of ownership transfered to company

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Ganeshbabu K (Audit and Tax Advisory) (48564 Points)
Replied 20 March 2013

and the difference between the exchange rate as at the date of the transaction and as at the date of settlement thereof should be recognised as income or expense, depending on the nature of the item to which the exchange difference(s) pertain, as per the requirements of AS 11,

Note:

if purchases is asset it should be adjusted to cost of asset as per AS11 and should not treat fluctuation as income or expence

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