When the vendor’s Maintenance Currency Indicator is checked, POs will be denominated in the Vendor Currency (the Maintenance Currency field on the PO header is stamped with the Vendor Currency). Following Purchase Order Entry, all subsequent transactions for the PO inherit the PO currency.
Purchase Order Receipts for POs denominated in foreign currency
At the time of Purchase Order Receipt (and at the time of Service PO Authorization), the current (as of receipt date) Exchange Rate Schedule for translating the PO currency into Home Currency is retrieved from the Exchange Rate Schedule Object. The Home Currency value of the receipt is calculated as PO Price * Quantity Received * the current Exchange Rate. All accounting entries generated from the receipt are based on this Home Currency value.
PO-AP Match when receipts are denominated in foreign currency
At the time of PO-AP Match, the Home Currency value of the vendor’s invoice is calculated using the Exchange Rate Schedule current for the transaction date (the invoice date).
If there has been a change in the exchange rate between the receipt date and the invoice transaction date
If the home currency value of the invoice exceeds the home currency value of the receipt, a loss on foreign exchange transaction is generated.
If the home currency value of the invoice is less than the home currency value of the receipt, a gain on foreign exchange transaction is generated.
AP documents denominated in foreign currency that are entered in the Payable Session and Payable Transaction functions
The Home Currency value of Invoices, Vendor Credits, and Vendor Debits that are entered in Payable Session and Payable Transaction is calculated using the exchange rate in effect on the transaction date. This exchange rate (and the schedule from which it comes) is stamped on the document.
Payments of AP documents denominated in foreign currency
At the time AP payments are posted,
The debit that removes the item being paid from the AP control account is calculated at the historical AP document rate.
So is any debit to the AP control account resulting from a cash discount taken.
The credit to cash is calculated by multiplying the payment amount in “maintenance” currency by the Exchange Rate Schedule current for the payment date.
So is any credit to the discounts earned account resulting from a cash discount taken.
If the Home Currency value of the debits exceeds the value of the credits, a gain is posted for the difference.
If the Home Currency value of the credits exceeds the value of the debits, a loss is posted for the difference.
Open Item Application between AP documents denominated in foreign currency
At the time Open Item Application,
The debit to AP that records the whole or partial removal of the credit-balance item (Invoice or Vendor Debit) is calculated at that item’s historical document rate.
The credit to AP that records the whole or partial removal of the Vendor Credit is calculated at the Vendor Credit’s historical document rate.
If the credit to AP exceeds the debit to AP, the difference is posted as a loss on foreign exchange.
If the debit to AP exceeds the credit to AP, the difference is posted as a gain on foreign exchange.
