Payment Scenarios

The following scenarios indicate how foreign exchange gain or loss is calculated for payments which are matched against bills:

• Scenario 1 — Payment Freeze Date = Bill Completion Date; Payment Amount = Invoice Amount

  	Bill Completion Date (01–01–2001)	Payment Freeze Date (01–01–2001)
  Exchange Rate From	USD	USD
  Exchange Rate To	INR	INR
  Exchange Rate	50	50
  Invoice/Payment Currency	USD	USD
  Invoice Amount	1000	-
  Base Currency	INR	INR
  Booked Revenue in Base Currency	1000*50 = 50000	-
  Payment Amount	-	1000
  Payment Amount in Base Currency on Bill Completion Date	-	1000*50 = 50000
  Realized Revenue (Payment Amount) in Base Currency on Payment Freeze Date	-	1000*50 = 50000
  Foreign Exchange Gain or Loss	-	Not applicable

  Observation: In the Scenario 1, the foreign exchange gain or loss is not applicable because Bill Completion Date and Payment Freeze Date are same.

• Scenario 2 — Payment Freeze Date Not Equal to Bill Completion Date; Exchange Rate is Same; Payment Amount = Invoice Amount

  	Bill Completion Date (01–01–2001)	Payment Freeze Date (01–02–2001)
  Exchange Rate From	USD	USD
  Exchange Rate To	INR	INR
  Exchange Rate	50	50
  Invoice/Payment Currency	USD	USD
  Invoice Amount	1000	-
  Base Currency	INR	INR
  Booked Revenue in Base Currency	1000*50 = 50000	-
  Payment Amount	-	1000
  Payment Amount in Base Currency on Bill Completion Date	-	1000*50 = 50000
  Realized Revenue (Payment Amount) in Base Currency on Payment Freeze Date	-	1000*50 = 50000
  Foreign Exchange Gain or Loss	-	50000–50000 = 0

  Observation: In the Scenario 2, there is no foreign exchange gain or loss because the exchange rate is same on the Bill Completion Date and Payment Freeze Date.

• Scenario 3 — Payment Freeze Date Not Equal to Bill Completion Date; Exchange Rate is Different; Payment Amount = Invoice Amount

  	Bill Completion Date (01–01–2001)	Payment Freeze Date (01–02–2001)
  Exchange Rate From	USD	USD
  Exchange Rate To	INR	INR
  Exchange Rate	50	51
  Invoice/Payment Currency	USD	USD
  Invoice Amount	1000	-
  Base Currency	INR	INR
  Booked Revenue in Base Currency	1000*50 = 50000	-
  Payment Amount	-	1000
  Payment Amount in Base Currency on Bill Completion Date	-	1000*50 = 50000
  Realized Revenue (Payment Amount) in Base Currency on Payment Freeze Date	-	1000*51 = 51000
  Foreign Exchange Gain or Loss	-	50000-51000 = –1000

  Observation: In the Scenario 3, there is foreign exchange gain of 1000 INR on 01–02–2001 because of difference in exchange rate.

• Scenario 4 — Payment Freeze Date Not Equal to Bill Completion Date; Exchange Rate is Same; Partial Payments; Total Payment Amount = Invoice Amount

  	Bill Completion Date (01–01–2001)	First Partial Payment Freeze Date (01–02–2001)	Second Partial Payment Freeze Date (01–03–2001)
  Exchange Rate From	USD	USD	USD
  Exchange Rate To	INR	INR	INR
  Exchange Rate	50	50	50
  Invoice/Payment Currency	USD	USD	USD
  Invoice Amount	1000	-	-
  Base Currency	INR	INR	INR
  Booked Revenue in Base Currency	1000*50 = 50000	-	-
  Payment Amount	-	500	500
  Payment Amount in Base Currency on Bill Completion Date	-	500*50 = 25000	500*50 = 25000
  Realized Revenue (Payment Amount) in Base Currency on Payment Freeze Date	-	500*50 = 25000	500*50 = 25000
  Foreign Exchange Gain or Loss	-	25000–25000 = 0	25000–25000 = 0

  Observation: In the Scenario 4, there is no foreign exchange gain or loss because the exchange rate is same on the Bill Completion Date and Payment Freeze Date.

• Scenario 5 — Payment Freeze Date Not Equal to Bill Completion Date; Exchange Rate is Different; Partial Payments; Total Payment Amount = Invoice Amount

  	Bill Completion Date (01–01–2001)	First Partial Payment Freeze Date (01–02–2001)	Second Partial Payment Freeze Date (01–03–2001)
  Exchange Rate From	USD	USD	USD
  Exchange Rate To	INR	INR	INR
  Exchange Rate	50	51	48
  Invoice/Payment Currency	USD	USD	USD
  Invoice Amount	1000	-	-
  Base Currency	INR	INR	INR
  Booked Revenue in Base Currency	1000*50 = 50000	-	-
  Payment Amount	-	800	200
  Payment Amount in Base Currency on Bill Completion Date	-	800*50 = 40000	200*50 = 10000
  Realized Revenue (Payment Amount) in Base Currency on Payment Freeze Date	-	800*51 = 40800	200*48 = 9600
  Foreign Exchange Gain or Loss	-	40000-40800 = –800	10000–9600 = 400

  Observation: In the Scenario 5, there is foreign exchange gain of 800 INR on 01–02–2001 and foreign exchange loss of 400 INR on 01–03–2001.

• Scenario 6 — Payment Freeze Date Not Equal to Bill Completion Date; Exchange Rate is Different; Payment Amount > Invoice Amount (i.e. Overpayment)

  	Bill Completion Date (01–01–2001)	Payment Freeze Date (01–02–2001)
  Exchange Rate From	USD	USD
  Exchange Rate To	INR	INR
  Exchange Rate	50	49
  Invoice/Payment Currency	USD	USD
  Invoice Amount	1000	-
  Base Currency	INR	INR
  Booked Revenue in Base Currency	1000*50 = 50000	-
  Payment Amount	-	1200
  Payment Amount in Base Currency on Bill Completion Date	-	1000*50 = 50000
  Realized Revenue (Payment Amount) in Base Currency on Payment Freeze Date	-	1000*49 = 49000
  Foreign Exchange Gain or Loss	-	50000–49000 = 1000

  Observation: In the Scenario 6, there is foreign exchange loss of 1000 INR on 01–02–2001 because of difference in exchange rate. Note that the foreign exchange gain or loss is not calculated on the overpayment amount (i.e. 200 USD).

• Scenario 7 — Payment Freeze Date Not Equal to Bill Completion Date; Exchange Rate is Different; Partial Payments; Total Payment Amount > Invoice Amount (i.e. Overpayment)

  	Bill Completion Date (01–01–2001)	First Partial Payment Freeze Date (01–02–2001)	Second Partial Payment Freeze Date (01–03–2001)
  Exchange Rate From	USD	USD	USD
  Exchange Rate To	INR	INR	INR
  Exchange Rate	50	49	52
  Invoice/Payment Currency	USD	USD	USD
  Invoice Amount	1000	-	-
  Base Currency	INR	INR	INR
  Booked Revenue in Base Currency	1000*50 = 50000	-	-
  Payment Amount	-	800	400
  Payment Amount in Base Currency on Bill Completion Date	-	800*50 = 40000	200*50 = 10000
  Realized Revenue (Payment Amount) in Base Currency on Payment Freeze Date	-	800*49 = 39200	200*52 = 10400
  Foreign Exchange Gain or Loss	-	40000–39200 = 800	10000-10400 = –400

  Observation: In the Scenario 7, there is foreign exchange loss of 800 INR on 01–02–2001 and foreign exchange gain of 400 INR on 01–03–2001. Note that the foreign exchange gain or loss is not calculated on the overpayment amount (i.e. 200 USD).