14 June 2012
we have made sale of a machine in INR, but receipt is in foreign currency EURO. So, whether Forex would be affected? If yes, at what rate Forex Gain / Loss should be recorded?
14 June 2012
Record Sale of Machinery on the date of sale ie when risk and rewards are passed on, at the exchnage rate prevailing on that date for INR: Euro.
Entry: Debtor Dr. xx Loss on sale of Machine Dr. xx To Machine Cr. xx To Profit on Sale of Machine Cr. xx
When you receive payment of Euro, you will receive it in INR at the date of receipt. This amount will be different then what is debited in Debtor account.
Book the difference between receipt credited in INR on the date of receipt and the invoice date INR value to foreign exchnage fluctuation account in profit & loss account.
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