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Exchange Rate Difference at the time of GR

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Dear Experts,

 

I made a PO with fixed exhange rate along with below details.

 

Quantity   = 10
Net Price  =100 $  

 

Exchange Rate = 110

 

 

At the time of GR exchange rate is 120. Now system is making the following entry

 

Stock-CS/RM (Dr)                      110, 000

GR/IR Clear RM/PM/CS (Cr)       110, 000

Price Diff- Mat (Dr).                     10, 000

Exch. Rate Diff (Cr)                     10, 000

 

 

When i fixed the exchange rate at 110, than why system is calculating 10, 000 of exchange rate.


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