(1) When an enterprise borrows foreign currency, it shall convert it into the bookkeeping base currency according to the market exchange rate at the time of borrowing foreign currency. At the same time,

Register relevant foreign currency accounts according to the amount of borrowed foreign currency.

(2) Exchange losses caused by changes in the conversion exchange rate of relevant foreign currency bank deposits and foreign currency loan accounts.

Benefits are generally confirmed through month-end adjustment.

(3) The handling of exchange gains and losses should depend on the nature of loans, such as loans related to the purchase and construction of fixed assets.

Exchange gains and losses arising from paragraph shall be handled in accordance with the principle of capitalization of borrowing costs.

Step 2: Examples

[Example] An enterprise borrows HK$ 500,000 from a bank, and the borrowed foreign currency is temporarily stored in the bank. The market exchange rate at the time of borrowing is 1 HKD, which is equivalent to 1. 10 RMB. Enterprises can do the following:

Debit: Bank deposit-HK$ 500,000 and RMB 550,000.

Loan: Short-term loan-500,000 Hong Kong dollars (550,000 US dollars) ￥ 550,000.

At the end of the period, the exchange gains and losses of "bank deposits" and "short-term loans" will be adjusted due to changes in the converted exchange rate, and the adjustment method is the same as before.