Consider the following situation ABC Ltd pays advance for purchases on 10/4/2009 for purchase of goods from china. Goods are delivered to abc ltd on 1/5/2009 with invoice date as 25/4/2009. Payment for the balance amount is made on 1/6/2009 by ABC ltd.When should the entry for purchase.
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purchase import
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Advance entry to be passed on date of payment, at the prevailing exchange rate on that date. The purchase entry is to be made on the date of receipt of goods at the exchange rate on that day and the difference between exchange rate on date of advance and date of purchase entry will be accounted as ERF. The balanace payment is to be accounted on that day's exchange rate and difference taken to ERF.
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