Question

    A company buys a machine from the US at $50,000 when $1

    = ₹70. On balance sheet date, $1 = ₹75. How is this change treated?
    A Capital profit Correct Answer Incorrect Answer
    B Forex loss in OCI Correct Answer Incorrect Answer
    C Forex loss in P&L Correct Answer Incorrect Answer
    D Forex gain in P&L Correct Answer Incorrect Answer

    Solution

    Monetary items (like creditors) are restated at closing rate and exchange difference is charged to P&L.

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