Foreing exchange difference

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

29 May 2010 If I have debtors balance for export the goods with us then what should I do for foreign exchange differance at the time of booking and as on 31st march? What entries should I do? and What are the basis of these entries?

CA Shiv

CA Shiv (Expert)
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30 May 2010 If there is increase in rate than:
US$: 40 at time of booking
US$ 45 on 31st march,
than debtor a/c dr. 5
to gain on FOREX 5
and Gain on forexa/c dr.
to P&L account....

IF there is decrease than
Pass reverse entries....

Abhishek

Abhishek (Expert)
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02 June 2010 If you have raised the invoice in terms of Rupees then there is no need to consider exchange difference at the time of booking itself, because the Importer will remitt rupee only.

However, if you have raised the invoice in any other currency than the exchange rate of that currency at the invoice date which is the transaction date has to be considered at the time of booking and at the year end the receivable has to be revised with the help of exchange rate as on 31st March 20xx.
The resulted gain or loss has to be booked in P&L a/c.

Gain:
Debtors Dr
To Foreign Exchange Variation

Loss:
Foreign Exchange Variation Dr.
To Debtors

Thank You

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DEEPIKA GOEL

DEEPIKA GOEL (Expert)
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02 June 2010 As rightly said by Mr. Abhishek, I want to add further. According to AS-11, all monetary items are need to be revalued at the exchange rate as on 31st march. Debtors is monetary item which are receivable in cash at some future date.
So, all the monetary items are which are payable or receivable in foreign currency are need to be revalued at closing exchange rate.

Exchange loss or profit will be part of the profit or loss account.