Exchange Rate Gains and Losses

In certain businesses it may be necessary to account for gains or losses resulting from changes in Exchange Rates. For example, if you post to an Account using an Exchange Rate that is correct for the Transaction Date and the Exchange Rate then changes significantly, you may need to apply the new Exchange Rate and post a gain or loss. One reason to do this is that in some countries, it is a legal requirement that companies update the balances of Balance Sheet Accounts using the latest Exchange Rates before producing a Balance Sheet report.

You can carry out this task using the Rate Gain/Loss setting in the Nominal Ledger together with the 'Rate Gain/Loss' Maintenance function. This will update the balances of every Currency Balance Sheet Account (i.e. every Asset, Liability and Equity Account in which a Currency has been specified).

Follow these steps:

  1. Use the Rate Gain/Loss setting in the Nominal Ledger to specify the Accounts that will store the gains and losses resulting from the Exchange Rate updates.

  2. Produce the Currency A/C Rate Change report in the Nominal Ledger to see the effect of recent Exchange Rate changes on past Transactions.

  3. Run the 'Rate Gain/Loss' Maintenance function in the Nominal Ledger. This will create a Transaction that posts the gains or losses resulting from the application of the current Exchange Rate.
Please follow the links in each step for more details about each one.


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