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Rate Of Exchange in case Of Import And Export

Others 1336 views 5 replies
Import Purchases - At what exchange rate should we book import purchase in books as per accounting standards and from where we will get this rate. Exports - at what exchange rate should we book exports sales in books as per accounting standards and where we will get this rate
Replies (5)

Use the spot rate for everything. When the payment is delayed, use the spot rate then. Recognise losses vs gains. This rate can be found on local stock exchanges

Forgot you can use currency converter as well: https://www.calculatorsoup.com/calculators/financial/currency-converter.php

Usually we are considering BOE exchange ate for all imports and bank rates for Import purchases payments, then RBI reference rates for month end valuation and closing

YOUR QUERY- foreign currency monetary items should be reported using the closing rate. However, in certain circumstances, the closing rate may not reflect with reasonable accuracy the amount in reporting currency that is likely to be realised from, or required to disburse, a foreign currency monetary item at the balance sheet date, e.g., where there are restrictions on remittances or where the closing rate is unrealistic and it is not possible to effect an exchange of currencies at that rate at the balance sheet date. In such circumstances, the relevant monetary item should be reported in the reporting currency at the amount which is likely to be realised from, or required to disburse, such item at the balance sheet date;

 

The meaning is simple, at initial recognition all cash, receivables and payables monetary items are translated to domestic currency in which a company prepares its statements. Then at subsequent measurement, the same method is followed ie., the monetary items are revalued at every balance sheet date in their reporting currency again to see if the monetary items value increased or decreased in domestic currency. 

Exchange rate, as per bill of entry or shipping bill, which is same as notified by CBIC. Refer the link: https://www.cbic.gov.in/Exchange-Rate-Notifications


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