Treatment for export sales exchange rate fluctuation

AS 2540 views 16 replies

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

Replies (16)

Should be accounted in Profit and loss account 

As foreign exchange fluctuation, am i right?

it should be part of profit and loss account

And what about the Import of Machinery?

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

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

charged to profit and loss account

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

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

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

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

charge from P& L A/c

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.

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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