Exchange gains and losses do not require tax adjustment. The currency transactions of an enterprise at the end of the tax year and the exchange losses incurred when the monetary assets and liabilities other than RMB are converted into RMB according to the spot exchange rate of RMB at the end of the tax year are allowed to be deducted, except those that have been included in the relevant asset cost and the owner's profit distribution.

Second, detailed analysis

Monetary assets include cash on hand, bank deposits, accounts receivable, other receivables and long-term receivables. Monetary liabilities include short-term loans, accounts payable, other payables, long-term loans, bonds payable and long-term payables. Non-monetary items refer to items other than monetary items, including inventories, long-term equity investments, fixed assets, intangible assets and prepayments. Since the foreign currency non-monetary items measured at historical cost have been converted at the spot exchange rate on the transaction date, the original functional currency amount should not be changed on the balance sheet date, and there will be no exchange difference. Foreign currency non-monetary items measured at fair value, such as trading financial assets, are converted at the spot exchange rate on the date when the fair value is determined. The difference between the converted amount of functional currency and the original amount of functional currency shall be included in the current profit and loss as a change in fair value.

3. What's the difference between foreign currency conversion?

Foreign currency project enterprises that substantially constitute net investment in overseas operations involve overseas operations when preparing consolidated financial statements. Where there are foreign currency monetary items that substantially constitute the net investment in overseas operations, the exchange difference caused by exchange rate changes shall be included in the translation difference of foreign currency statements of owners' equity. When disposing of overseas operations, it is included in the current profits and losses.