10 August 2011
Hi.. i am doing audit of a company who import goods .
Date of Bill of Lading - 26.03.2011 .. 1USD = Rs. 45.71
Payment Date - 31.03.11.. 1 USD @ Rs 44.81..
31.03.11 Closing Rate.. 1USD = Rs. 44.90
Date on which goods are received in godown - 02.05.11
Now the question is that company had made a purchase on 26.03.11 and since the goods are not received it would be shown as Stock in transit and hence company cannot book it as a purchase.
Now my question is how the exchange difference would be calculated in the above circumstances.
Moreover, when they will book purchase in may they would book it at the rate of Bill of lading. So how would they calculate exchange difference in that case also.
So hence i want that how much amount will come as exchange difference in 2010-11 and 2011-12.
Thanking you in anticipation and i would highly appreciate a prompt reply as it is very urgent.
10 August 2011
Date of bill of lading has no meaning here. As the material has been received after the date of payment which by chance comes on 31.03.2011 therefore there will not be any exchange loss or gain. You need to book stock in transit equal to amount actually paid.
11 August 2011
The liability is already paid and hence how can you account Exchange difference. Accounting of Exchange difference as per Accounting standard-11 should be recognised for the future expected losses due to foreign exchange fluctuations.
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