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

Sundaram Exports Ltd sold goods to a US customer on 10 February 2026 for USD 20,000 when the rate was Rs 83 per USD. The amount was still outstanding on the reporting date of 31 March 2026, when the closing rate was Rs 84.50 per USD. As per AS 11, what is the exchange difference to be recognised in the statement of profit and loss for the year ended 31 March 2026?

The exchange gain is Rs 30,000. A foreign currency debtor is a monetary item restated at the closing rate: USD 20,000 x 84.50 gives Rs 16,90,000 against Rs 16,60,000 booked originally. The increase is recognised in the profit and loss statement for the year.

  1. ALoss of Rs 30,000
  2. BGain of Rs 30,000Correct
  3. CGain of Rs 16,60,000
  4. DNo amount, as the debtor is not yet settled

Explanation

The debtor is a monetary item and is reported at the closing rate. Closing value = 20,000 x 84.50 = Rs 16,90,000; recorded value = 20,000 x 83 = Rs 16,60,000. The difference of Rs 30,000 is a gain since the receivable rose. Recognising nothing until settlement is wrong because AS 11 requires recognition at the reporting date.

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