On 30th January, 20X1, A Ltd. purchased a machinery for $ 5,000 from USA supplier on credit basis. A Ltd.'s functional currency is Rupees. The…

Journal Entries Purchase of Machinery on credit basis on 30th January 20X1: Particulars ₹ Machinery A/c ($ 5,000 x 60) Dr. 3,00,000 To Creditors-Machinery A/c 3,00,000 (Initial transaction will be recorded at exchange rate on the date of transaction) Exchange difference arising on translating monetary item on 31st March 20X1: Particulars ₹ Profit & Loss A/c [($ 5,000 x 65) – ($ 5,000 x 60)] Dr. 25,000 To Creditors-Machinery A/c 25,000 Machinery A/c Dr. 30,000 To Revaluation Surplus (OCI) 30,000 [Being Machinery revalued to USD 5,500; (60x ($ 5,500 - $ 5,000)] Machinery A/c Dr. 27,500 To Revaluation Surplus (OCI) 27,500 (Being Machinery measured at the exchange rate on 31.3.20X1 [$ 5,500 x (₹ 65 -60)] Revaluation Surplus (OCI) Dr. 17,250 To Deferred Tax Liability 17,250 (DTL created @ of 30% of the total OCI amount) Exchange difference arising on translating monetary item and settlement of creditors on 31st March 20X2: Particulars ₹ Creditors-Machinery A/c ($ 5,000 x 65) Dr. 3,25,000 Profit & loss A/c [(5,000 x (₹ 67 -65)] Dr. 10,000 To Bank A/c 3,35,000 Machinery A/c [{$ 5,500 x (₹ 67 -65)}] Dr. 11,000 To Revaluation Surplus (OCI) 11,000 Revaluation Surplus (OCI) Dr. 3,300 To Deferred Tax Liability 3,300 (DTL created @ of 30% of the total OCI amount)