Query in as 11

989 views 4 replies

Pawan Verma

Assistant manager finance

186 Points Posted on 03 January 2012

As per AS - 11

"A foreign currency transaction should be recorded, on initial recognition in the reporting currency, by applying the rate of foreign currency at the date of the transaction".

Now what does that transaction date means? Is that the date of payment or date of filing bill of entry(date of receipt of goods)?

One of our clients have imported a capital asset. Details as under:

Date of payment (100% advance)- 20th Sep 11, Rs/$ - 48

Date of Bill of entry - 10th October 11, Rs/$ - 50

It is taking the bill of entry date i.e 50/- while recording in the books. I feel that it is not appropriate.

Can u please share your views!

Replies (4)

sivaram

Asst Mgr-Taxation

6918 Points Posted on 03 January 2012

Initial recognition recorded at approximate rate what is approximate rate not defined in AS-11.IT CAN BE SPOT RATE OR TT Buying or Selling rate

CA.Praveen Ponnappa

CA PRactice

128 Points Posted on 03 January 2012

Transaction date is the date on which property on the goods transferred to the buyer i.e., the date on which risk on the goods transferred to the buyer. Transaction date in case of FOB purchase is the date of Bill of Lading & in case of CIF purchase it is Bill of entry date.

Pawan Verma

Assistant manager finance

186 Points Posted on 03 January 2012

@ praveen konappa:

Praveen, but even in CIF, i think risks and rewards are transferred by the seller at the time of dispatch. While the seller takes insurance cover on behalf of the buyer.

So even in such case, ownership is transferred at the time of dispatch and payment date would be more appropriate!

Kolluru Krishna Murty

Partner

315 Points Posted on 10 January 2012

The date of Bill of Lading should be the transaction date for recording the transaction,because as explained by one of our friend on that the property(title in the goods)is passed on to the importer.

And this is the date after which the overseas sale by transfer of title in goods through endorsement can be made by the importer.

All other dates are only like payment of advance,receipt of goods,payment of bill etc are only procedural modalities.

kkm