Example - Gains and Losses for an Accounts Receivable Invoice

You can track gains and losses related to accounts receivable invoices.

In this example, your company in the United States sends a European client an invoice for 1000 euros. The project’s billing currency is euros, and your company’s functional currency is United States dollars.

When You Post the Invoice

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

Account	Debit	Credit
Accounts Receivable	1500
Revenue		1500

When You Run the Gains/Losses and Revaluations Process

At the end of the accounting period, you have not received payment from the client, so the entire amount of the invoice 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 Receivable	100
Unrealized Gain		100

When You Post the Cash Receipt

You receive payment for the invoice. When you post the cash receipt, the exchange rate is 1.55 to 1. Deltek reverses the posting to the Unrealized Gain account and calculates the gain or loss using the current exchange rate. The result is a realized gain of $50.

The effect of the cash receipt in the general ledger is the following:

Account	Debit	Credit
Cash	1550
Accounts Receivable		1600
Unrealized Gain	100
Realized Gain		50