21 September 2011
Para 9 of AS 11 provides that foreign currency transactions should be recorded at the exchange rate prevailing on the date of the transaction.
Para 12 of AS 11 provides that payables are examples of monetary items.
Also, Para 13 provides that exchange difference arising on settlement at rates different from those at which they were initially recorded should be recognised as income or expense.
Accordingly the treatment will be as under:
Exchange DifferenceDr. Rs. 1,000/- (1000*1) To Payables Rs. 1,000/-
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