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Foreign Exchange Differences

How do we account for when the exchange rate changes between PO and invoice?

I have posted an A/P invoice on to our system for $1,000,000 on 31 October 2007 when $1 = £2.00

I have now paid the invoice so $1,000,000, but the exchange rate is $1 = £2.10

2 questions - How do I match the payment against the invoice?

Granted the $ is zero, but the Business Partner shows a £ balance of (($1,000,000 / 2) – ($1,000,000 / 2.10)) = £23,809 difference in exchange rates. So how do I account for the exchange rate difference to clear the account?

Many thanks

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  • Best Answer
    Posted on Nov 20, 2007 at 02:58 PM

    This is manual work. you could use exchange rate differences as a standard one. It is available in financial module. you execute on the date where you post the AP invoice. There is GL account for realized exchange rate gain and loss that must be set in the GL account determination.

    The transaction journal will be resulted in after perform the exchange rate differences. I have performed this work and the result is okay. usually the company do this yearly or monthly if the exchange rate of currency is not highly fluctuations.


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