Forex

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What are the standard accounting systems for booking of  Forex transactions like booking of import purchase & making payment for the same. Presently we book import purchase on the basis of Custom exchange rate & after LC due date ( or forward booked previously  we make payment as per dollar rate. But due to this some time it occurs heavy losses which affect the profitability.

Is there any  other standard accounting system  to avoid such losses other than above ?? and what will be the proper heading & grouping for said difference "

Awating your early reply.

Thanks

Priyal

 

 

Replies (2)

The Import Purchase is booked on the date of the Bill of Entry at the rate prescribed in the Bill of Entry.

 

Whenever the Payment is made through LC the Payment is recored at the the rate by which the bank has made the Payment from the Bank Payment advice.

 

Any Difference between the rate of Purchase and Payment should be calssified as " Foreign Exchange Gain or Loss".

 

correct, follow AS 11


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