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Treatment for export sales exchange rate fluctuation

Somaas Kandan (CA Final) (385 Points)

01 June 2011

What is the accouting treatment for Export sales exchange rate fluctation?

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16 Replies

Abishek (Student) (1108 Points)
Replied 01 June 2011

Should be accounted in Profit and loss account

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Somaas Kandan (CA Final) (385 Points)
Replied 01 June 2011

As foreign exchange fluctuation, am i right?

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 01 June 2011

it should be part of profit and loss account

Somaas Kandan (CA Final) (385 Points)
Replied 01 June 2011

And what about the Import of Machinery?

CA ADITYA SHARMA (CA IN PRACTICE ) (16719 Points)
Replied 01 June 2011

if you r using any accounting software you should firstly create rates fluctuation ac, ubder the group current asset. at the end it should be altered as indirect income or indirect expenses

rectify me if i am wrong

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Somaas Kandan (CA Final) (385 Points)
Replied 01 June 2011

But our clients has charged the exchange rate difference to the concerned Asset itself.

Rajnikant Vadigoppula (CA, CS And CMA Final) (919 Points)
Replied 01 June 2011

charged to profit and loss account

Santosh Kumar (C.A) (72 Points)
Replied 02 June 2011

ANY FOREIGN EXCHANE DLUCTUATION SHOULD BE ADDED TO THE ASSET ITSELF CHECK OUT AS 11

C.A Tarun Shah (practice) (271 Points)
Replied 02 June 2011

For Import of machiery Foreign Exchane diff.is capitalised or deducted (if it's gain) from the landed cost of Macinery .If Machinery is taken on loan then diif is to be capitalised as per SEction 43-A of I.Tax Act

C.A Tarun Shah (practice) (271 Points)
Replied 02 June 2011

AS per sec-43A Actual diff.is capitalised only on payment of foreign currency loan

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Upender Anand (C.A final) (58 Points)
Replied 02 June 2011

Any loss or gian arise from these type of transaction is transfered to profit and loss account.

sandeepverma (don't make exuse for study) (304 Points)
Replied 02 June 2011

charge from P& L A/c

CA Sumit Bansal (CA) (75 Points)
Replied 02 June 2011

As per my opinion:

In case of consumables (other than Capital items) it may be reduced/added from relevant head of expenditure or it may be shown in foreign exchange fluctuation a/c separetaley. But a proper note should be given in notes to accts. (if related to current year).

If related to transactions made in earlier years then only to exchange fluctuation a/c

For capital items, it should be adjusted from cost.

suja nair (Finance) (61 Points)
Replied 03 June 2011

Any normal exchange rate fluctuation is directly reduced/ added to sales. Hence sales will be inclusive of exchange fluctuation. In case of exchange rate fluctuation relating to forward cover is shown as a separate account in Books.

However no portion will go to fixed assets as, as per AS11 only exchange fluctuation relating to loan taken for purchase of fixed assets will be added to/reduced from fixed assets.