What should be treatment

Others 714 views 5 replies

Naveen Chand Khulve

1521 Points Posted on 03 April 2009

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

Replies (5)

Sachin

Chartered Accountant

419 Points Posted on 04 April 2009

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

Shudhanshu Agrawal

Business

2570 Points Posted on 04 April 2009

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

Naveen Chand Khulve

1521 Points Posted on 04 April 2009

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	"

deepak K Gujrati

CA-practice

1077 Points Posted on 08 April 2009

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.