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).