Dear members
i wanna to know as per ind as for acconting for forien exchange,i hav dr o/s on 31.3.12 for $ 100000.00 which is intiallly recognised at let Rs/$ is 44 ,now if its 55 at 31.3.12 whether the transaltion is to be done at 55.isnt that effect as 1 prusent concept
Revenue can be recognised if
i) Right to receive has been established
ii) There is no uncertanity regarding receipt of such Amount
So it can be recorded at 55 Rs. & No prudence is been violated due to this treatment.
Now in your mind it may be a Question arises that then why stock held at closing of financial year(closing stock) not be recorded on fair value while its certain that such stock will be sold at higher of the cost lets say 100 is its cost & 120 is sale value prevailing in the market
so here you cannot record these stocks on fair value beacuse Right to receive has not been established while in case of debtor you have the right to demand 55 Rs per Dollar from your debtor it means here is an right to receive such amount which was not available in caseof closing stock
Hope you will understand.
CAclubindia
