AS- 11

This query is : Resolved

Mohit Gupta (Querist)
Follow

15 February 2011 I have a debtors of Rs. 100 and for hedging this i took a forward contract of Rs. 150 due to transaction in normal course f business.

So wat will be treatment as per AS-11 on year end in books of A/c??

sandesh mundra

sandesh mundra (Expert)
Follow

16 February 2011 As per AS-11, Forward Contracts need to be accounted for as below:-

Spot rate - Rs.130 + Premium Rs.20 = Rs.150

Premium has to be amortised over the period of the contract

At year end you may compare the closing exchange rate which is lets say 140.

You then need to book a loss of Rs.40 on current liability and gain of Rs.30 on Forward contract