What should be the treatment of following Situation..
During the 08-09 we received advance from a Foreigner person amount of Rs 50,000($1000 @ 50) for issue of share. Later as on closing the dollar rate was increase to @ 52. This create a loss of Rs 2000 for me as on closing of the Books of A/C.
As on April 09 the same person ask to issue share to him equivlaent to amount given by him.
So what should b the treatment of Rs 2000 which i was earlier debited in P&L a/c.
Thanx in Advance
Dear Naveen,
In my opinion, the company should make following entry in he books of accounts :-
Foreign Investor ....................Dr.
To Share Capital A/c
and there will be no any treatment of Rs. 2,000/-
please write any other query related to taxation on my email id sachinagarwalcallb @ gmail.com
According to me entries will be
Foreigner's A/c ....................Dr. 50000
To Share Application A/c (pending allotment) 50000
and at the time of issue of shares
Share Application A/c (pending allotment) 50000
To Share capital A/c 50000
| Originally posted by :Naveen Chand Khulve | ||
| " | What should be the treatment of following Situation.. During the 08-09 we received advance from a Foreigner person amount of Rs 50,000($1000 @ 50) for issue of share. Later as on closing the dollar rate was increase to @ 52. This create a loss of Rs 2000 for me as on closing of the Books of A/C. As on April 09 the same person ask to issue share to him equivlaent to amount given by him. So what should b the treatment of Rs 2000 which i was earlier debited in P&L a/c. Thanx in Advance |
" |
The company has to issue share and receive issue price in Indian Currency. The amount sent by the foreigner though was in foreign currency but has to be converted in Indian Value. The shares can't be issued in Dollar Value. So the exchage difference if any is the profit or loss of the Investor i.e. the foreigner.
So it is neither your loss or income. The company has to receive the issue price in Re terms.
I agree with Mr. Gujrati
CAclubindia
