Rounding Gain/Loss Using the Same Exchange Rate
In this example, a foreign currency customer’s invoice contains three line items, and the exchange rate is 24.537. The line item amounts are 4,475.00, 2,400.00, and 627.00. The invoice total is 7,502.00. At the time of payment the exchange rate is 24.537, the same as when the invoice was created. When the payment is applied a rounding gain/loss is created.
GL Impact of the Invoice
The general ledger impact for the Income lines are the amounts in foreign currency multiplied by the exchange rate, rounded to two places after the decimal point.
|
Transaction Line |
×Rate |
Base Currency |
|---|---|---|
|
4,475.00 |
24.537 |
109,803.08 |
|
2,400.00 |
24.537 |
58,888.80 |
|
627.00 |
24.537 |
15,384.70 |
|
Total Accounts Receivable |
|
184,076.58 |
The transaction lines in this example each post to a different account. However, the lines post separately even when they post to the same account.
|
Account |
Debit |
Credit |
|---|---|---|
|
Accounts Receivable |
184,076.58 |
|
|
Income |
|
109,803.08 |
|
Deferred Revenue |
|
58,888.80 |
|
Other Income |
|
15,384.70 |
The exchange rate when you accept and apply the payment is 24.537, the same as when the invoice was created.
GL Impact of the Payment
To calculate the base currency for the foreign currency payment, the total 7,502.00 is multiplied by the exchange rate: 7,502.00 ×24.537 =184,076.574. The total is rounded down to 184,076.57.
|
Account |
Debit |
Credit |
|---|---|---|
|
Undeposited Funds |
184,076.57 |
|
|
Accounts Receivable |
|
184,076.57 |
A currency revaluation transaction is created to balance accounts receivable.
GL Impact of the Currency Revaluation (Rounding Gain/Loss)
|
Account |
Debit |
Credit |
|---|---|---|
|
Rounding Gain/Loss |
0.01 |
|
|
Accounts Receivable |
|
0.01 |