Question

You have turned on Multicurrency with USD as the home currency, and you have created an invoice for €1,000. The exchange rate for an invoice on the date of the transaction is 1.16849. It is the end of the year and you want to revalue the euro currency to the current exchange rate of 1.163061 for the outstanding invoice. What is the effect on the realized exchange gain/loss account?

Answer 1

$5.

Step-by-step explanation:

The USD amount when the invoice was generated is $1,168

€1,000 * $1.16849/ € = $1,168

The USD amount on the year end when exchange rate is updated is $1,163

€1,000 * $1.163061/ € = $1,163

The net realized exchange gain/loss is ($1,168 - $1,163) = $5.

The currency quotes are given in the direct quote so we multiply by the invoice amount.