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Feb 16, 2011 at 09:17 PM

foereign exchange difference on accrued interest

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business context :

- loan in foreign currency

- accrued interest with difference (or delta) method

- at each month end, an exchange rate difference is calculated (on the accrued interest upto the previous month end) and posted via TPM44 (with difference method) in UNrealized foreign exchange gain account (755xxxx) or in Unrealized foreign exchange loss account (655xxxx).

- At the PAYMENT date of the interest, TPM44 is run one more time to accrue from the last month end upto the payment date. A last foreign exchange difference is calculated and posted.

Problem :

Upon interest payment, the customer wants the 755xxx and the 655xxxx accounts to be reset to zero and wants the NET foreign exchange result on the interest payment to be reclassified in 754xxx "REALIZED foreign exchange gain", either in 654xxxx "REALIZED foreign exchange loss".

ex.

month 1 :unrealized fx gain +50

month 2 :unrealized fx loss - 20

month 3 : unrealized fx loss - 40

Between end month 3 and interest payment : unrealized fx gain +30

755xxxx credit balance : 80

655xxxx debit balance : 60

=> net REALIZED FX gain = +20

Questions

1. How to configure the following posting:

debit 755xxx 80 (clear unrealized gain account)

credit 655xxx 60 (clear unrealized loss account)

credit 754xxx 20 (post net REALIZED fx gain)

2. When posting the UNREALIZED FX result, how to customize so that the UNREALIZED FX result is not spread over two accounts, but the net unrealized result is either on 755XXX (in case of accumulated net unrealized gain) of on 655xxxx (in case of accumulated net unrealized loss)?

month 1. post a credit of 50 in 755xx

month 2. post a debit of 20 in 755xx (so NOT in 655xxx)

month 3. post a debit of 30 in 755xx (=> 755XXX is at zero)

AND

post a debit of 10 into 655xx

At payment date,

post a credit of 10 in 655xx

post a credit of 20 into 755xxx

reclassify net unrealized gain of 20 from 755xxx into 754xxxx

Note that I am NOT talking about the revaluation of the principal amount which is done via the reset method.

ALL HELP MUCH APPRECIATED !!!

Thanks,

Carl