Accounting for different currencies

[david@purpleaccounts.com]

OK, so use the monthly conversion rate published by HMRC to convert your interest receipts. With regard to the USD investment, this will need to be revalued at the company year end at the year end conversion rate.

[mashetti]

If you have a UK company, the year end accounts will be presented in GBP. Funds received in a foreign currency against a GBP invoice will undoubtedly result in a forex difference, sometimes you will gain and other times you will lose.

Yeah it's a UK company but I'm not getting the dosh from overseas invoices, it's just some cash from UK that my company invested in USD. So it's just sitting there in a USD account, getting interest each month in USD, I might add to it in the near future, but one day when the rates drop I will bring it back to the UK.

So really, I'm just wondering how I account for this month to month when the money is still in USD. thanks

[david@purpleaccounts.com]

If you have a UK company, the year end accounts will be presented in GBP. Funds received in a foreign currency against a GBP invoice will undoubtedly result in a forex difference, sometimes you will gain and other times you will lose. If you want to avoid this risk exposure, your foreign paying client should send payment instructions to their bank stating to pay GBP equivalent of x. P&L tranactions are converted at the monthly rate, HMRC publsh a rate which is available from their website and you'd be advised to use this to avoid any possible doubt.

[xoggoth]

Never bothered to check this out exactly as my co's foreign earnings are about 50 quid a year, but I can't see why any figure should matter other than what a UK company actually receives or spends in UK currency.

Useless comment probably but at least it takes it back up.

[mashetti]

I remember reading a post regarding this not too long ago but I can't seem to find it anymore.

Anyway, I just want to be clear in my mind how you are meant to account for different currencies (ie USD).

Do you convert everything from USD back to £'s each month or do you have to keep track of the rate at the time of each transaction (so if I only buy once then I know the rate then but if I get monthly interest do I find out the rate for that day for the interest alone or the whole balance or can I just use an average for the month or some other way)?

I remember the post said something like it was a month by month thing on your P+L and sometimes you're up and other times you are down...

My searching skills must be lacking but i'm sure someone here will find it in no time. ta