Businesses need exchange rate applied when accounting the transactions related to foreign currencies and evaluate Exchange rate difference incurred during and at the end of the accounting period
I. How to record the World Bank's exchange rate arising in the period
1. When purchasing materials, goods, fixed assets, and services in foreign currency:
Debit of 151, 152, 153 .. (actual exchange rate on the transaction date)
Export debt (foreign exchange loss)
Having 111, 112 (according to the exchange rate recorded in the accounting book)
With 515 (CLTG interest)
2. When purchasing materials, goods, fixed assets, services but not yet paid, when borrowing or receiving internal debt... in foreign currency, based on the actual transaction exchange rate on the transaction date, record:
Debit of 111, 112,
There are 331, 341, 336
3. When advancing money to the seller in foreign currency to purchase goods, fixed assets and services:
- The accountant records the advance amount to the seller at the actual exchange rate at the time of the advance, recording:
Export debt (actual exchange rate on the advance date)
Export debt (loss of World Bank)
Having 111, 112 (according to the exchange rate recorded in the accounting book)
With 515 (CLTG interest)
- When receiving supplies, goods, fixed assets or services from the seller:
+ For the value of supplies, goods and services corresponding to the amount of foreign currency advanced to the seller, recorded at the actual exchange rate at the time of advance payment:
Debt of 151, 152, ...
With 331 (actual exchange rate on advance)
+ For unpaid value, the accountant records the actual exchange rate at the time of transaction (transaction date).
Debit of 151, 152 .. (actual exchange rate on the day of transaction)
Having 331 (actual exchange rate at the transaction date)
4. When paying debts payable in foreign currency
Debit of 331, 341 (exchange rate recorded in accounting book)
Export debt (loss of World Bank)
There are 111, 112 (exchange rate recorded in accounting book)
With 515 (CLTG interest)
II. Accounting of World Bank accounts due to revaluation of monetary items denominated in foreign currencies
1. When preparing financial statements, accountants re-evaluate foreign currency items at the actual transaction exchange rate at the reporting date:
- If CLTG arises, record:
Debit of accounts of 1112, 1122, 128, 228, 131, 136, 138, 331, 341 ...
Credit in Account 413
- If there is a loss in World Bank, record:
Debit of 413 Account
Credit in accounts of 1112, 1122, 128, 228, 131, 136, 138, 331, 341 ...
2. Accounting for handling exchange rate differences arising from revaluation of foreign currency items:
The accountant shall transfer all the difference of the re-evaluated exchange rate (according to the offset of the amounts arising on the Debit side and the Credit side of the 413 TK account) into the 635 or 515 TK account to determine the business results.
Debt of 413 / Yes 515
Or Debt 635 / Yes 413
III. Provisions on exchange rates and exchange rate differences
1. Exchange rate difference
Exchange rate differences mainly arise in the following cases:
- Actual buying, selling and exchanging. settlement of economic transactions arising in foreign currencies during the period
- Re-evaluate monetary items denominated in foreign currencies at the time of preparation of the financial statements
- Converting financial statements prepared in foreign currencies to VND
2. Principles for determining exchange rates and handling CLTG
a) Enterprises apply the actual transaction exchange rate to convert to accounting currency according to the following principles:
Actual exchange rate when buying and selling foreign currencies (spot foreign currency trading contract, forward contract, futures contract, option contract, swap contract) is the exchange rate signed in the contract. foreign currency trading between businesses and commercial banks.
In case the contract does not specify the payment rate, the enterprise shall record accounting books on the following principles:
- Actual exchange rate when recording receivables: Is the buying rate of commercial banks where the enterprise appoints customers to pay at the time the transaction occurs.
- Actual exchange rate when recording liabilities: Is the selling rate of commercial banks where the enterprise is expected to transact at the time the transaction occurs.
- Actual exchange rate when contributing capital or receiving capital contribution: is the foreign currency buying rate of the bank where the enterprise opens an account to receive capital from investors at the date of capital contribution;
- Purchase transactions of assets or expenses are immediately paid in foreign currencies, the actual exchange rate is the buying rate of the commercial bank where the enterprise makes the payment.
b) Enterprises are allowed to choose to apply the book exchange rate according to the following principles:
Book rates include:
- Nominal book-keeping exchange rate: Is the exchange rate when collecting receivables, deposits, deposits or paying payables in foreign currencies determined at the exchange rate at the time of transaction. or the end-of-term reassessment.
- Moving Average Rate: Is the rate used on the Cash Account side when making payments in foreign currencies. This exchange rate is determined on the basis of taking the total value reflected in the debit side of the money account divided by the total amount of foreign currency actually available at the time of payment.
c) The exchange rate to revalue foreign currency items is the average end-of-period transfer rate of the commercial bank where the enterprise regularly conducts transactions (chosen by the enterprise) at the time of preparing the financial statements.
The whole of exchange rate differences due to revaluation of monetary items denominated in foreign currencies (according to the net amount after clearing the amounts arising on the Debit side and the Credit side of the Import and Export account) are transferred to financial expenses or Revenue from financial activities to determine the business results.
IV. Accounting principles of exchange rate differences
- At the same time, enterprises must keep track of their original currencies on the detailed accounting books of accounts: cash, bank deposits, receivables, payables, and owners' contributed capital.
- All exchange rate differences arising in the period are immediately reflected in 515, 635 of the reporting period.
- Enterprises must re-evaluate monetary items denominated in foreign currencies according to the average transfer exchange rate at the end of the period of the commercial banks where the enterprises regularly have transactions at all times of preparation of financial statements as prescribed by law.
- Enterprises are not allowed to capitalize the deposit assets' value into the uncompleted asset value.
