I hav a query. what is the treatment of Exchange loss if I import goods in august 2008 valued $100 (Exch Rate: 45) payment date december 08 (exch rate 48)... What would be the treatment of loss ?? Shall be add back to cost of raw material or just show as forex loss in Profit & loss account . If possible also tell me treatment as per company act and income tax act.
Thank You
Narayanan Balakrishnan
(Chartered Accountant)
(98 Points)
Replied 14 August 2009
Only monetary items are restated at closing rate on balance sheet date. Inventory is not a monetary item and hence neither exchange loss is recognised nor is the difference added to cost.
CA munjal
(articled clerk)
(100 Points)
Replied 14 August 2009
Any exchange gain\loss arising on account of difference in exhange rate as on the date of initial recoginistion and date on which payment is made should be charged to P&L a\c as per AS 11. As per IT Act also same should be charged to P&L a\c.
CA munjal
(articled clerk)
(100 Points)
Replied 14 August 2009
Any exchange gain\loss arising on account of difference in exhange rate as on the date of initial recoginistion and date on which payment is made should be charged to P&L a\c as per AS 11. As per IT Act also same should be charged to P&L a\c.
Narayanan Balakrishnan
(Chartered Accountant)
(98 Points)
Replied 15 August 2009
Right. I did not read the question properly, I thought the payment was already made and there was no creditor outstanding. Sorry for misreading the question. There is an exhange loss which will be charged to pnl.
Sandeep Marathe
(CA Final)
(423 Points)
Replied 21 August 2009
exchange loss should be charged to P&L A/C
CAclubindia
