Gains and Losses from Accounts Receivable Transactions

If you have client invoices for which the billing currency is different than the company’s functional currency, gains and losses may occur when you run the Gains/Losses and Revaluations process and when you post the cash receipts.

When You Run the Gains/Losses and Revaluations Process

When you post invoices with a foreign billing currency, Deltek stores the transaction amounts in all of the relevant currencies, including the billing currency and the company’s functional currency.

When you run the Gains/Losses and Revaluations process, Deltek does the following for any of those invoices that have an outstanding balance:

1. Calculates the current value of the unpaid balance in terms of the functional currency. To do this, Deltek uses the exchange rate in effect on the date you specify when you run the Gains/Losses and Revaluations process (for example, the ending date of the current accounting period).
2. Compares the current value to the previous value to determine if a gain or loss exists. (The previous value is the original value plus any gains or losses calculated previously by the Gains/Losses and Revaluations process.)
3. Posts the difference between the previous value and the current value as either a credit entry to the unrealized gain account or a debit entry to the unrealized loss account. The offsetting entry is to the accounts receivable account.

If unbilled retainage exists for invoices, the process calculates gains and losses for that retainage also.

When You Post the Cash Receipts

When you receive payment for invoices that have a foreign billing currency and you post the cash receipt, Deltek does the following:

1. Calculates the current value of the unpaid balance in terms of the functional currency. To do this, Deltek uses the exchange rate in effect on the posting date of the cash receipt.
2. Compares the current value to the original value to determine if a gain or loss exists.
3. Reverses the previously posted unrealized gain or loss, if one exists.
4. Posts the difference between the original value and the current value as either a credit entry to the realized gain account or a debit entry to the realized loss account. The offsetting entry is to the cash account.