in IAS 21 - The Effects of Changes in Foreign Exchange Rates by
Should a credit note be processed at the same foreign exchange rate as the original invoice, even when the invoice is several months prior? Or should the current FX rate be used and and exchange gain/loss be calculated?

Please log in or register to answer this question.

1 Answer

0 like 0 dislike
by Level 5 Member (29.1k points)
As you would know, this is what the standard says:

A foreign currency transaction shall be recorded, on initial recognition in the functional currency, by applying to the foreign currency amount the spot exchange rate between the functional currency and the foreign currency at the date of the transaction.[IAS 21.21]

So it is not clear about the way credit notes are handled. I think both methods should be okay if you uniformly apply as a policy. But I would prefer the latter as it is easier to follow. ie. you always use the current ex rate for any transaction or reversal of the same and difference is recognized as exchange gain or loss.

Welcome to AccountantAnswer Forum, where you can ask questions and receive answers on Accounting-related questions.

Get AccountantAnswer App

Categories



...