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CA Intermediate · Advanced Accounting · AS 11 The Effects of Changes in Foreign Exchange Rates

Ananya Exports Ltd. has a foreign currency monetary item: a trade receivable of USD 20,000 arising from an export sale made on 10 February 2026 when the rate was ₹83.00 per USD. On 31 March 2026 (the reporting date) the closing rate was ₹84.50 per USD. As per AS 11, what exchange difference should be recognised in the statement of profit and loss for the year ended 31 March 2026?

The exchange gain is ₹30,000. Under AS 11, monetary items such as receivables are restated at the closing rate, and the difference from the transaction-date rate, USD 20,000 × ₹1.50, is recognised in profit and loss for the period as a gain.

  1. AExchange gain of ₹30,000Correct
  2. BExchange loss of ₹30,000
  3. CExchange gain of ₹16,60,000
  4. DNo exchange difference until the receivable is settled

Explanation

A monetary item is reported at the closing rate. Difference = USD 20,000 × (84.50 − 83.00) = ₹30,000. Since a receivable is now worth more rupees, it is a gain, recognised in profit and loss. Waiting until settlement is wrong because AS 11 requires recognition at the reporting date.

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