As per as 11

This query is : Resolved

Pna (Querist)
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27 August 2009 As per as 11 foreign exchange difference is to be shown separately.

When some exchange rate is arise on purchase of goods, and if same goods is in stock at the end of closing period.

The payment for same is outstanding on closing date.

Now for example purchase of goods made on 25th March for USD 500000, exchange rate is 45 on date of purchase.

if exchange rate as on 31-03-09 is 45.40 we have to make provission for exchange rate differnce by .40 * 500000 USD.

the material cost shown 500000USD* 45
and exchange rate difference shown 500000USD*.40

the company has policy to show exchange differnce in head purchase expenses and adding the same in cost of material consumed.

the issue is whether the exchange difference is included in valuation of inventory or not.

Manoj

Manoj (Expert)
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27 August 2009 I think material cost should not be affected & exchange rate difference should not be entered in the books