Realized Gain/Loss Calculations

To calculate realized gains and losses, you must post receipts. Realized gains and losses are based on exchange rate fluctuations that occur between transactions that involve a foreign or alternate currency receipt. When you post receipts, the system calculates gains and losses based on whether the exchange rates changed from the date of the invoice to the date of the receipt. If exchange rates changed, the system creates journal entries for the gains and losses.

Realized gains and losses are calculated when you apply receipts to the invoices, but they are recognized in the general ledger when you post the receipts. To calculate the gain or loss, the system determines if the exchange rate changed between the invoice date and the receipt date as described:

• The invoice date is the date that was used to retrieve the exchange rate to calculate the invoice amounts.

  The invoice date can be either the DGJ (Invoice GL Date) or the DIVJ (Invoice Date) in the F03B11 table. You set a processing option in the P03B0011 Master Business Function to specify which date is used when you create an invoice.

• The receipt date is the date in the DGJ (Receipt GL Date) field in the F03B14 table.

  This is the date on the receipt detail item that the invoice was paid.

To summarize, the system determines which invoice date (DGJ or DIVJ) was used when the invoice was created and uses that as the invoice date to calculate the gain or loss.

For foreign currency receipts, the potential exists for a standard gain or loss. To calculate the gain or loss, the system multiplies or divides the invoice amount by the difference in the exchange rate from the time the invoice was entered and the time the payment was received.

If an alternate currency receipt is involved, the potential exists for two gains or losses on a transaction:

• Standard gain/loss. An amount based on exchange rate differences between the foreign (transaction) currency and the domestic currency from the transaction date to the receipt date.

• Alternate currency gain/loss. An amount based on exchange rate differences between the alternate (receipt) currency and the domestic currency. This gain or loss is the difference between:

  • The amount calculated by converting the alternate currency receipt directly to the domestic currency (this is the amount that is actually deposited to or paid from the bank account)

  • The amount calculated by converting the alternate currency receipt to the foreign currency to the domestic currency