Query in Accounting Treatment of Import Purchases

Entry is passed in the books only when the right of the property is passed to you. That is on dilivery. For the determination of foriegn exchange rate see the date of bill of entry. The date of bill of entry will form the basis for determining the rate.

Purchase / Import  a/c     Dr

       To creditors a/c

On Payment the difference due to fluctuation of exchange will have to be accounted through P&L a/c as per AS -11

Creditors a/c   Dr.

Loss on Foriegn exchange fluctuation a/c   Dr.

          To Gain on Foriegn exchange fluctuation a/c

          To Bank a/c

If the bill is outstanding then the difference between the booked rate and 31st March rate has to be provided for through P&L. a/c.

Creditos a/c   Dr.

        To Gain on Foriegn exchange fluctuation a/c

or

Loss on Foriegn exchange fluctuation a/c   Dr.

        To Creditors a/c

If the bill is around the closing date that is 31st March then, see whether the goods has been consigned or not.

If yes then you will have to book an entry for stock in transit