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

Rohan Pharma Ltd exported goods on 10 March 2026 for USD 30,000 when the rate was ₹80, and the amount was received on 20 April 2026 at ₹81. The closing rate on 31 March 2026 was ₹82. At what amount should the debtor be reported in the balance sheet at 31 March 2026, and what is the exchange difference recognised in that year?

The debtor is reported at ₹24,60,000 with an exchange gain of ₹60,000. Being a monetary item, it is restated at the closing rate of ₹82 (USD 30,000 × ₹82), and the increase over the ₹24,00,000 booked at the sale date is recognised in profit and loss that year.

  1. A₹24,60,000; gain ₹60,000Correct
  2. B₹24,00,000; gain nil
  3. C₹24,30,000; gain ₹30,000
  4. D₹24,60,000; gain ₹30,000

Explanation

A foreign currency debtor is a monetary item and is reported at the closing rate: USD 30,000 × ₹82 = ₹24,60,000. The difference from the transaction-date amount of ₹24,00,000 is a gain of ₹60,000 in the year of the change in rate. The later receipt at ₹81 does not affect the 31 March figure; it is dealt with in the next year.

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