Foreign currency — OpenTuition Forums

Hhamza5y ago

Hello I have a question that at the end of year our unsettled transaction we record our gain/loss according to our closing rate but gain is not realised where it is recorded and what's the journal entry? Kindly answer... Thanks

P2-D2Tutor5y ago#1

Hi, It will be recorded through profit or loss. The gain is a credit and the loss a debit, with the other side reflecting the change in value of the monetary item. Thanks

Hhamza5y ago#2

Thanks for Answer... One more thing... There is a note in my Book that Exchange gain/losses : "Recorded in SPL unless movement in FV recorded in equity,in which case the exchange gain/loss is also taken to equity...." When we take this to equity and why? Kindly explain para...

P2-D2Tutor5y ago#3

You're welcome! I doubt you'd see your point in an FR exam and it would be more likely in SBR. However, all it is doing is matching the exchange gain/loss to where the change in value is recorded. So if we have an overseas FVTOCI investment that changed in value then the exchange gain/loss will also go to OCI. Thanks

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