16 July 2008
lets take an example. you ordered goods worth $500.and you gave him advance of $200 and its inr value comes to rs.8500. Ist entry is vendor a/c Dr.8500 to Bank a/c 8500 when goods come and you make final payment @rs.43.the entry would be vendor a/c dr. 12900, to bank a/c 12900. now as er AS-11 , goods should be capitalised @ bill of entry rate lets say, Rs.44, then the accounting entry would be goods a/c dr. Rs 22000(500*44) to vendor a/c Rs.21400 to exchange fluctuation a/c 600. this exchange fluctuation will go to P& L a/c at the end of the year. you can also refer my powerpoint presentation for more clarification. you will get the same in income tax files in this website or you can mail me at sachin.kataria@bankofamerica.com, i will send you from there
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