When the exchange rate changes, where is the exchange difference recorded in the accounts?

Accounting is kept in soum. Every amount in foreign currency is converted into soum, and the exchange rate changes every day. The difference in soum that arises from this change is called an exchange difference.

What are the basic rules?

• A foreign currency transaction is recorded in soum at the Central Bank rate on the date of the transaction
• Monetary items (paragraph 9 of NAS No. 22 includes among them: foreign currency in the cash desk and in the bank; receivables and payables denominated in foreign currency, except advances received without a repayment obligation and paid without a right of refund; foreign currency loans and borrowings; settlements with employees in foreign currency; cash equivalents; dividends payable in foreign currency) are revalued every month at the rate on the last day of the month
• Non-monetary items (paragraph 10 includes among them: fixed assets acquired for foreign currency, intangible assets, goodwill, equipment for installation, capital investments, inventories; the ratio of founders' shares in the charter capital of a company with foreign investment; investments in charter capital and shares; advances received or paid without a repayment condition) are not recalculated once recorded, even if the rate changes
• The exchange difference is immediately taken to the financial result as income or expense from financing activities
• A positive difference is recorded in 9540, a negative one in 9620
• Exchange differences cannot be "accumulated" and recorded all at once later
• Paragraph 12 of NAS No. 22: when assets, work or services are purchased against an advance paid in foreign currency, the part of their cost equal to the advance is recognised at the rate on the date the advance was paid; when they are sold against an advance received in foreign currency, the part of the revenue equal to the advance is recognised at the rate on the date the advance was received

Example: what does an exporting company record?

The "Yashil Vodiy" company shipped dried fruit to a foreign buyer; the contract amount is 10 000 US dollars. The rates are hypothetical.

At month end the dollar became more expensive and the buyer's debt in soum reached 121 000 000: a positive difference. On the payment day the rate fell slightly and 120 500 000 arrived: a negative difference. In the end, 4010 was closed to zero, and the total exchange difference is +1 000 000 – 500 000 = +500 000 soum.