10 July 2010
A co., during there import of goods, made advance payment to the creditor and when it receive that goods, it made a journal entry like Diff. in exchange To purchase or vice versa for exchange diff. whether it is right or wrong, if wrong then what will be the treatment?
Also in another cases whemn it made payment to the party then also it made above entry, so plsease resolve this also.
10 July 2010
any exchange gain or loss arised due to difference in rate cant be adjusted in purchase, it is to be disclosed under the account head foreign currency exchange gain/loss. and this account to be closed by transferring to P&L a/c. one more thing needs to be clarified that if your balance sheet date comes in between the transaction date and settlement date then liability is to be disclosed at the rate prevailing on the balance sheet date.
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