exchange gain or loss
Exchange gains and losses, also known as exchange differences, are the result of exchange rate fluctuations. When an enterprise conducts foreign currency transactions, exchange transactions, period-end account adjustments, and foreign currency statement translation, it converts the difference generated by using exchange rates of different currencies or different parity of the same currency into functional currency. Simply put, exchange gains and losses refer to the difference in the amount of functional currency due to different exchange rates in the accounting process of various foreign currency businesses.
job operation
Exchange gains and losses of different nature should be included in different accounting statements, and the contents that affect the financial statements are also different.
As for trading gains and losses, because it is accompanied by the emergence of foreign currency business, and foreign currency business usually corresponds to some exchange behavior, trading gains and losses will actually occur, that is, the emergence of trading gains and losses will eventually affect the cash inflow and outflow of enterprises. Therefore, trading gains and losses should be included in the income statement of the enterprise, which will affect the taxable income of the enterprise.
For translation gains and losses, it is only the difference figure caused by the inconsistency of exchange rates used in the process of translating foreign currency financial statements. It will never really happen, that is to say, the generation of converted gains and losses will not directly affect the cash inflow and outflow of enterprises. Therefore, the conversion gains and losses should not be included in the company's income statement, which will have an impact on the taxable income of enterprises. "Translation gains and losses" shall be listed separately under "shareholders' equity" in the balance sheet.
In terms of processing time, there are two methods: one is to incorporate exchange gains and losses into the current accounting statements for immediate confirmation, and the other is to postpone processing according to different rules. "Exchange gains and losses of cleared transactions" are included in the current income statement, which affects the current gains and losses; "Exchange gains and losses of unsettled transactions" should be deferred, that is, deferred to the actual liquidation of transactions, and then included in the income statement. In short, trading gains and losses will only affect the taxable income of enterprises when they actually occur, and should be included in the income statement. In addition, exchange gains and losses related to the purchase of long-term assets or the generation of long-term liabilities, which are relatively large, should be amortized within the service life of long-term assets or the validity period of long-term liabilities. Since the conversion gains and losses do not involve different accounting periods, there is no question of whether to postpone them. For exchange gains, debit "bank deposits" and credit "financial expenses".