USA Foreign currency translation on Inventory

[Jackson_H]

I am working for a U.S. company. We purchased inventory from China in RMB, and paid with USD. I am preparing the financial statement at yearend of Dec 31, 2023. I know we need to used average exchange rate for income statement and exchange rate on balance sheet date on balance sheet items. My question is how do I do it? I do not know how to start. Do I just setup a worksheet using the USD for all asset, liab, and equity, and just use December 31 yearend exchange rate for inventory? Do I need to use average exchange rate for COGS? Can someone show me how to do it?

Thanks.

 

[BIG E]

Try this link to get exchange rates -

Currency Converter | Foreign Exchange Rates | OANDA

Use our free currency converter. Get accurate and reliable foreign exchange rates, based on OANDA Rates™.

www.oanda.com

 

[kirby]

Although working with average rates is fun there is no need to do that in your case, if what you stated was the complete picture. Since you paid with USD then the USD amount is the amount of the inventory. Just as if you paid a US supplier in USD.
Now, things are different if there was a contract and you were to pay in RMB at some point in the future. That's when you have to apply exchange rates to the RMB to get the USD amount to record at each balance sheet date. And when you finally pay then there might be a foreign exchange gain or loss to record. But you did not mention that this was the case, just that you paid in USD.

So the case you described is similar to : "We bought from a Chinese company and (immediately) paid in USD. How to record this?" And answer is - in that case- your inventory entry will use the USD amount you paid - just as if you paid a US supplier.