Question on Foreign currency Valuation
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Answer / raj
Foreign Currency valuation is used in reporting purpose.
As per accounting Concepts , We have to show expected Losses in report while dawing reports from system for free flow of funds.
FCV is used in all cases Like GL , VENDOR, CUSTOMER cases to calculate expected Loss or Profit...
EX: FCV result will come in 2 ways...
1. Unrealized Exchange gain/Loss
2. Realized Exchange Gain/Loss
Its applicable for Foreign Transactions.
EX : When we Purchased goods from vendor 10 Units @ 50$ * 60 Inr = 3000 Inr
When we run the FCV that time the Dollar value Increased ie; 62 Inr
Ie 100 Rs is the Exchange rate diff that 100 Rs will be UNREALIZED EXCHANGE LOSS....
Entry will be.
DR Unrealized Exchange Loss Acc
CR Balance Sheet adjustment Acc
After Drawing report Well reverse the entry.... Becaus the real transaction lot yet done...
Reversal entry
DR Balance Sheet adjustment Acc
CR Unrealized Exchange Loss Acc
Realized Exchange Gain/Loss:
ex: We Paid money to vendor against invoice...
Exchange rate is 58 rs
200 Rs is Profit for Company.
Entry will be.
DR Vendor
CR Bank Clearing Acc
CR Realized Exchange Gain
| Is This Answer Correct ? | 24 Yes | 0 No |
Hi Guru's,
Can anyone please explain, use of Foreign Currency valuation? and Send me Some FI tickets.
Thanks in Advance.
Regards,
Himavant
| Is This Answer Correct ? | 0 Yes | 5 No |
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