DOLLOR DIFFERENCE

This query is : Resolved

MAHESH (Querist)
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19 August 2009 WE MAKE A EXPORT SALE (USA) OF $106848
BUT IN OUR CURRENCY INVOICE MADE RS.52,67,640/-
& PARTY SEND US A DOLLORS 3 TIMES.
1. ADVANCE $21365 @ RS.49.16 i.e. RS.10,50,284.74
2. AFTER SALE $74786 @ RS.48.73 i.e. RS.36,44,302.29
3. & LAST $10680 @ RS.47.89 i.e. RS.51,14,55.62

NOW AT THE LAST IN OUR ACCOUNT SHOWS OUTSTANDING OF RS.61,598.35

I WANT TO CAN I WRITE OFF THIS AMOUNT?
IF YES, TELL ME UNDER WHICH ACCOUNT HEAD?
IF NO, TELL ME WHAT I DO WITH THIS FIGURE?
TELL ME JOURNAL ENTRY WHICH I WILL USED IN TALLY.

Prashant

Prashant (Expert)
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16 September 2009 AS per AS11:
â€¢ Profit or loss arising on the renewal or cancellation of the forward contract should be
recognised as income or expense for the period. A gain or loss on forward exchange
contract intended for trading or speculation should be recognised in the profit and loss
statement for the period. Such gain or loss should be computed with reference to the
difference between forward rate on the reporting date for the remaining maturity period
of the contract and the contracted forward rate. This means that the forward contract is
marked to market. For such contract, premium or discount is not recognised separately.
â€¢ Disclosure to be made for:
i) Amount of exchange difference included in Profit and Loss statement.
ii) Net exchange difference accumulated in Foreign Currency Translation Reserve.
iii) In case of reclassification of significant foreign operation, the nature of the
change, the reasons for the same and its impact on the shareholders fund and
the impact on the Net Profit and Loss for each period presented.

You have to adjust differece by Debiting to Forex Transation a/c under head Other Income and credit to party.