Client has invoiced in USD in advance and recognises revenue based on work completed.
The USD balaace in Deferred Income account on the balance sheet should be translated at the historical exchange rate and not the closing exchange rate under FRS102 ?
Thank you
Replies (4)
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If you converted the entire invoice value to GBP on issue, and then deferred the GBP amount not yet realised, there's no re-conversion needed.
If the work is going to be performed over an extended period or if the amounts were material, I'd maybe want to consider in more detail.
Sounds material then. I stand by my original answer, though.
The conversion to GBP crystallises when you book the invoices. If you record the invoices prior to payment, there may be a gain or loss if the exchange rate moves between those invoice and payment. But once an invoice is settled, there is no possibility of gain or loss on the transaction as a result of currency movements.