{"id":4726,"date":"2014-01-24T09:12:26","date_gmt":"2014-01-24T07:12:26","guid":{"rendered":"http:\/\/www.officetodo.com\/public\/?p=4726"},"modified":"2014-01-19T09:13:19","modified_gmt":"2014-01-19T07:13:19","slug":"inventories-received-in-foreign-currencies","status":"publish","type":"post","link":"http:\/\/www.officetodo.com\/public\/inventories-received-in-foreign-currencies\/","title":{"rendered":"Inventories received in foreign currencies"},"content":{"rendered":"<p><span style=\"font-size: medium;\"><span style=\"color: #000000;\"><span style=\"font-family: Calibri;\">You\u2019re buying goods from international suppliers that send you their invoices in foreign currencies. That\u2019s perfectly normal.<\/span><\/span><\/span><\/p>\n<p><span style=\"font-size: medium;\"><span style=\"color: #000000;\"><span style=\"font-family: Calibri;\">One thing to keep in mind at all times is that your accounting is always done in one currency and not various at the same time. You may trade in different currencies, but they should be translated into one for your accounting purposes. This \u201cone currency\u201d is called in accounting world \u201cfunctional currency\u201d.\u00a0<!--more--><\/span><\/span><\/span><\/p>\n<p><span style=\"font-size: medium;\"><span style=\"color: #000000;\"><span style=\"font-family: Calibri;\">So now that this is covered, how would you treat inventories that are invoiced in a foreign currency? The initial recognition is done at the transaction date (that is when the risks and rewards of the ownership have transferred over to you as the buyer). You recognize the goods in the amount the foreign currency translates into your functional currency at the date. You debit your inventories and credit your liabilities in the same amount. However, at period end you need to revalue balances nominated in foreign currencies. What does this mean?<\/span><\/span><\/span><\/p>\n<p><span style=\"font-size: medium;\"><span style=\"color: #000000;\"><span style=\"font-family: Calibri;\">This means that your liabilities are due in not your functional currency but the foreign currency the supplier expects to receive. Unless implicitly agreed, the supplier usually expects you pay in the currency they\u2019ve sent you the invoice in.<\/span><\/span><\/span><\/p>\n<p><span style=\"font-size: medium;\"><span style=\"color: #000000;\"><span style=\"font-family: Calibri;\">At the balance sheet date you would then revalue your liabilities into the exchange rate prevailing at the date between your functional currency and the specific foreign currency, however, your inventory remains unaffected. Instead, the loss or gain is accounted to income statement as a part of the non-operating results.<\/span><\/span><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>You\u2019re buying goods from international suppliers that send you their invoices in foreign currencies. That\u2019s perfectly normal. One thing to keep in mind at all times is that your accounting is always done in one currency and not various at the same time. You may trade in different currencies, but they should be translated into [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[25,73],"tags":[],"class_list":["post-4726","post","type-post","status-publish","format-standard","hentry","category-1-basic-accounting","category-1-18-foreign-currency"],"aioseo_notices":[],"_links":{"self":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4726","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/comments?post=4726"}],"version-history":[{"count":1,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4726\/revisions"}],"predecessor-version":[{"id":4727,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/posts\/4726\/revisions\/4727"}],"wp:attachment":[{"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/media?parent=4726"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/categories?post=4726"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.officetodo.com\/public\/wp-json\/wp\/v2\/tags?post=4726"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}