Among the accounting issues for your foreign currency transactions are foreign exchange gains. These profits are linked to currency exchange rate fluctuations that will be in your favour when you make transactions abroad. In order to maximise these foreign exchange gains, DeftHedge offers you its SaaS solution specially designed for companies.
In order to improve all your international transactions, the DeftHedge software supports you and helps you in your daily decision making.
How to calculate the exchange rate gain ?
At the end of each financial year of a company, all gains and exchange losses are calculated. The overall amount is calculated by recalculating the monetary item at the exchange rate in force at the end of the accounting year.
Depending on the result, the company may therefore obtain an exchange gain or loss. Once the calculation has been made, the company must proceed to record these exchange gains and losses.
Since 1 January 2017, the details of these foreign currency transactions have been recorded in several accounts:
The recording of foreign exchange gains and losses is therefore particularly detailed in a company’s financial year.
What is a passive translation difference ?
At the end of the financial year, the conversion may therefore result in the recognition of an asset or liability translation difference:
The translation difference will therefore be more or less significant depending on the fluctuation in exchange rates during the period. In order for your translation difference to be a liability, you should therefore adopt the best possible financial strategy.
The translation difference will therefore be more or less significant depending on the fluctuation in exchange rates during the period.
In order for your translation difference to be a liability, you should therefore adopt the best possible financial strategy.
How to record your operations impacted by currency fluctuations ?
To make it easier to record your foreign exchange transactions, you have the option of having a foreign exchange account.
Article 420-7 of the General Chart of Accounts does not impose any particular rule concerning the keeping of this type of account, only the obligation to convert the sums recorded at the end of the accounting year.
This external account thus allows you to keep your various transactions as separate as possible and to simplify your accounting.
Find out more about : accounting and exchange rates
The recording of foreign currency transactions in a specially dedicated account therefore appears to be particularly suitable to facilitate your accounting at the end of your financial year.