Can anyone tell me if this is the best way to adjust monthly fx rates at month end and year end reports regarding purchases in US $'s.
The computer system is set at $1.5 to the £. At period end the o/s creditor balance variance between $1.5 and currect rate is adjusted on the balance sheet usually reducing the creditor balance, therefore DR B.S and CR P&L.
When payment is made to the supplier the variance in the fx rate is posted as a credit note to the P&L.
At the next month end the variance in the o/s creditor balance is again calculated and the variance in fx rate between the previous month and current month is posted to the B.S. and P&L as before. This somtimes results in a CR to the B.S and DR P&L
