Accounting for accruals in different currency

Ireland Discussion in 'General Accountancy Discussion' started by Kay2020, Jan 18, 2019.

  1. Kay2020

    Kay2020

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    I am an accountant at my firm. My query is that if we accrue for income receivable in USD and our operational currency is gbp how should I recongise the income when it's received. I would have accrued for this income over 2 months. However when it actually pays the fx rate will be different from the fx rate used for the initial accrual.
     
    Kay2020, Jan 18, 2019
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  2. Kay2020

    Fidget VIP Member

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    Normally you'd translate into GBP at the point of sale, using the exchange rate at time, then re-translate at the end of month 1 using the rate at that time. Then translate again at the point the payment is received at the end of month 2. That'll give you gains/losses on exchange. It's normal.

    If there isn't much difference between the rate at the point of sale and the end of month 1, then you could probably just by-pass the re-translation at that point. But you'll need to do it when the payment is received.
     
    Fidget, Jan 18, 2019
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  3. Kay2020

    Kay2020

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    I 100% agree with approach I was doubting myself when I reviewing thr accounts really appreciated
     
    Kay2020, Jan 19, 2019
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