Our company's person went to abroad country for business work for the period
25/10/24 To 31/10/24.
He incurred foreign expensesed 2000 US
from his own pocket ( He not get advance for tour )
We get reference of foreign exchange rate on currency rate website for the date of 31/10/24 & exchange usd in to INR
& give INR to our person.
Here we are not given advance, so we can not create foreign exchange gain / loss.
Is it this method correct or is it necessary to account for foreign exchange gain / loss
Pl guide
In this case, yes, you should account for foreign exchange gain/loss.
1. The employee incurred expenses in USD, and you reimbursed them in INR.
3. Exchange rates may have fluctuated during this period.
To account for foreign exchange gain/loss:
1. Record the expense in USD (2000) on the date it was incurred (25/10/24).
2. Use the exchange rate on that date to convert USD to INR (initial exchange rate).
3. Record the reimbursement in INR on the date it was made (31/10/24).
4. Use the exchange rate on that date to convert USD to INR (reimbursement exchange rate).
CAclubindia
