Example - Gains and Losses for an Accounts Payable Voucher

You can track gains and losses related to Accounts Payable vouchers.

In this example, your company in the United States receives an invoice for 1000 euros from a European subcontractor. Your functional currency is United States dollars.

When You Post the Voucher

When you enter and post the voucher, the exchange rate is 1.5 dollars to the euro, so the voucher amount expressed in your functional currency is $1,500. The voucher affects the general ledger as follows:

Account	Debit	Credit
Accounts Payable		1500
Expense	1500

When You Run the Gains/Losses and Revaluations Process

At the end of the accounting period, you have not yet paid the subcontractor, so the entire amount of the voucher is outstanding. The exchange rate is now 1.6 to 1.

When you run the Gains/Losses and Revaluations process, Deltek determines that the outstanding amount, expressed in the functional currency, is $100 more than the original amount. This is the result in the general ledger:

Account	Debit	Credit
Accounts Payable		100
Unrealized Loss	100

When You Process the Payment

When you process the payment for the outstanding balance of the voucher, the exchange rate is 1.55 to 1. Deltek reverses the posting to the Unrealized Loss account and calculates the realized gain or loss using the current exchange rate. The result is a realized loss of $50.

The effect of the payment in the general ledger is the following:

Account	Debit	Credit
Cash		1550
Accounts Payable	1600
Unrealized Loss		100
Realized Loss	50