03-05-2009, 07:39 PM
Dear
Now-a-days some companies are using Multiple currencies in ERP based accounting system, where transactions level forex rate are fixed as a base rate or flexible field as per requirment and at balance sheet currency differences are charges to Unrealized Forex Gain/(Loss).
For Example your company has purchased raw material with cost of 1,0000 US$ on Credit(LC) that time rate was 1US$=79PKR.
Transaction Level Difference
Dr.=========Materials/Inventory/Purchase------->1000x79 79,000
Cr.============Supplier/AP/Creditor-----------------------> 79,000
While making payment rate is 1US$=80PKR.
Dr.=========Supplier/AP/Creditor-------> 79,000
Dr.=========Realized Forex Loss---------> 1,000
Cr.============Bank Account-----------------------> 80,000
Balance Sheet Level Difference
Maitaining Foreign current account Like Dollar a/c
Suppose in your books one dollars showing balance of 195,000PKR.(US$ 2,500)
as of balance sheet date= 01US$=80PKR
For forex adjustment we have to pass following entry.
Dr.===========Bank Account account (80-78)x 2,500---------> 5,000
Cr.==============Unrealized forex Gain-----------------------> 5,000
In your case as per my understanding
Dr.=========PKR account------->1000x80 80,000
Cr.============US$ Account------------------>1000x80 80,000
and at the end or balance sheet date you will book Unrealized forex gain or loss for this dollar account.
I hope you will get some idea from above intances.
Regards
Tariq
Now-a-days some companies are using Multiple currencies in ERP based accounting system, where transactions level forex rate are fixed as a base rate or flexible field as per requirment and at balance sheet currency differences are charges to Unrealized Forex Gain/(Loss).
For Example your company has purchased raw material with cost of 1,0000 US$ on Credit(LC) that time rate was 1US$=79PKR.
Transaction Level Difference
Dr.=========Materials/Inventory/Purchase------->1000x79 79,000
Cr.============Supplier/AP/Creditor-----------------------> 79,000
While making payment rate is 1US$=80PKR.
Dr.=========Supplier/AP/Creditor-------> 79,000
Dr.=========Realized Forex Loss---------> 1,000
Cr.============Bank Account-----------------------> 80,000
Balance Sheet Level Difference
Maitaining Foreign current account Like Dollar a/c
Suppose in your books one dollars showing balance of 195,000PKR.(US$ 2,500)
as of balance sheet date= 01US$=80PKR
For forex adjustment we have to pass following entry.
Dr.===========Bank Account account (80-78)x 2,500---------> 5,000
Cr.==============Unrealized forex Gain-----------------------> 5,000
In your case as per my understanding
Dr.=========PKR account------->1000x80 80,000
Cr.============US$ Account------------------>1000x80 80,000
and at the end or balance sheet date you will book Unrealized forex gain or loss for this dollar account.
I hope you will get some idea from above intances.
Regards
Tariq
