Save Rs 499. Go Ad-Free with CAclubindia Pro for 2 Full Years. Subscribe Now!

Revaluation of ap and ar

1278 views 1 replies

vijay

accounts executive

28 Points Posted on 05 February 2012

good day

i have a couple of questions regarding the treatment of certain items.I am in a shipping co located abroad-

1) is it right to revalue AP and AR of our principal which is in USD and some amounts in local currency, it is revalued to the exchange rate as on the Balance sheet date and the difference is booked in exchange difference?

2) we are also making remittance to our principal located in the middle east so that is also being booked in the AP as it is in foreign currency and the exchange gain or loss is booked on the transaction.This AP is again revaluad at the balanceheet currency rate.is it kind of a double booking because the realised gain or loss is booked and again the amounts in the AP are revalued

3) is depreciation calculated on royalty?

Replies (1)

Guest

As per AS 11 Exchange diffrece should be booke on FOringen Currency Monity Items (FCMI, ur AP and AR) on the balace sheet date ....thuse ur entry on the date of transacetion date is not correct ..hawever practically speeking it will not make much of a diffrence becos net effect in P & L will be the same..provided u do not adjust the diffrence in ur inventry and book it as exchange diffrence only...further if it is a royality recevable contract it shall be amortised on the bases of valu of expected beniffet it shall be an amortization under AS 26 "Intangable assetes " not Deprication (AS 10)