Shane Ambler wrote:
> August Zajonc wrote:
>> For balance sheet accounts, their value at a given point in time in a
>> home currency is of course dependent on exchange rates which creates the
>> currency gain or loss on the P&L side, the account that captures
>> exchange rate movements. But this is dependent on the relative
>> differences between the rates when every dollar was earned and current
> Well the exchange rate at the time the payment is received is only the
> speculative (possible) value of a foreign currency and may not account
> for exchange fees either. This speculative value changes daily
> (hourly) and is not really relevant to the money amount recorded. The
> speculative value is only relevant at the time a report is run to show
> current value in a common currency.
Statement 8 of the FASB.
"This Statement requires that all amounts measured in a foreign currency
be translated at the exchange rate in effect at the date at which the
foreign currency transaction was measured. All exchange gains and losses
were required to be included in income in the period in which they
arose, i.e., when the rates changed."
In other words, for companies accounting according to FASB the exchange
rate at the time revenue is recognized is *critically* important. And it
turns out there are good reasons for this treatment, as the decision to
hold revenue n foreign currency is a speculative one ultimately and
belongs in currency gain / (loss).
Multiple currency handling is both a complicated area, but one with some
relatively well defined approaches. Saying that the exchange rate at the
time of recognition is not relevant seems a stretch, I'd be curious what
systems you are using this approach for of course :) And why would you
include exchange rate fees in a non-cash transaction? Those fees are
generally accounted for differently, and reduced by making large
transactions (which again argues for handling them separately as they
are dependent not on recognition of revenue but on method of conversion
at a later date).
Sorry, but I've head a lot of comments on the money types that make me
very curious as to how people are actually using them! Would love to
learn more as it is a space I am interested in and have some experience
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