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Somaas Kandan (CA Final)     01 June 2011

Treatment for export sales exchange rate fluctuation

What is the accouting treatment for Export sales exchange rate fluctation?



 16 Replies

Abishek

Abishek (Student)     01 June 2011

Should be accounted in Profit and loss account 

Somaas Kandan

Somaas Kandan (CA Final)     01 June 2011

As foreign exchange fluctuation, am i right?

CA ADITYA SHARMA

CA ADITYA SHARMA (CA IN PRACTICE )     01 June 2011

it should be part of profit and loss account

Somaas Kandan

Somaas Kandan (CA Final)     01 June 2011

And what about the Import of Machinery?

CA ADITYA SHARMA

CA ADITYA SHARMA (CA IN PRACTICE )     01 June 2011

if you r using any accounting software you should firstly create rates fluctuation ac, ubder the group current asset. at the end it should be altered as indirect income or indirect expenses

 

rectify me if i am wrong

Somaas Kandan

Somaas Kandan (CA Final)     01 June 2011

But our clients has charged the exchange rate difference to the concerned Asset itself.

Rajnikant Vadigoppula

Rajnikant Vadigoppula (CA, CS And CMA Final)     01 June 2011

charged to profit and loss account

Santosh Kumar

Santosh Kumar (C.A)     02 June 2011

ANY FOREIGN EXCHANE DLUCTUATION SHOULD BE ADDED TO THE ASSET ITSELF CHECK OUT AS 11

C.A Tarun Shah

C.A Tarun Shah (practice)     02 June 2011

For Import of machiery Foreign Exchane diff.is capitalised or deducted (if it's gain) from the landed cost of Macinery .If Machinery is taken on loan then diif is to be capitalised as per SEction 43-A of I.Tax Act

C.A Tarun Shah

C.A Tarun Shah (practice)     02 June 2011

AS per sec-43A Actual diff.is capitalised only on payment of foreign currency loan

Upender Anand

Upender Anand (C.A final)     02 June 2011

Any loss or gian arise from these type of transaction  is transfered to  profit and loss account.

sandeepverma

sandeepverma (don't make exuse for study)     02 June 2011

charge from P& L A/c

CA Sumit Bansal

CA Sumit Bansal (CA)     02 June 2011

As per my opinion:

In case of consumables (other than Capital items) it may be reduced/added from relevant head of expenditure or it may be shown in foreign exchange fluctuation a/c separetaley. But a proper note should be given in notes to accts. (if related to current year). 

If related to transactions made in earlier years then only to exchange fluctuation a/c

For capital items, it should be adjusted from cost.

suja nair

suja nair (Finance)     03 June 2011

Any normal exchange rate fluctuation is directly reduced/ added to sales. Hence sales will be inclusive of exchange fluctuation. In case of exchange rate fluctuation relating to forward cover is shown as a separate account in Books.

However no portion will go to fixed assets as, as per AS11 only exchange fluctuation relating to loan taken for purchase of fixed assets will be added to/reduced from fixed assets.


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