Accounting Standard 11 (Revised)

[josephrf]

Hi, I'm a tybcom student and have the following difficulty

suppose the transactions are as follows

a) 1-1-04 Purchased Machinery from Kemco of US for USD 1000. Exchange rate on 1-1-04 = Rs.50.

So I will pass the following journal entry

Machinery A/c Dr. Rs.50,000
To Kemco of US A/c Rs.50,000

b) 10-1-04 Full Payment made to Kemco. Exchange rate on 10-1-04 = Rs.51 per USD.

According to AS11 Revised which entry would I pass?

Would I pass this entry
Kemco of US A/c Dr. Rs.50,000
Machinery A/c Dr. Rs. 1,000
To Bank A/c Rs. 51,000

Or Would I pass this entry
Kemco of US A/c Dr. Rs.50,000
Foreign Exchange Fluctuation A/c Dr. Rs. 1,000
To Bank A/c Rs.51,000

Please can someone tell me which entry is correct according to the Revised Accounting Standard 11.

Thanks Joe.

[mhmirza]

AS 11 (Revised) is an indian standard not applicable in Pakistan. Thus we can not help you. However I think your first entry might be correct.