Calculating Currency Gains and Losses

Proliance can calculate gains and losses caused by currency exchange fluctuations in a workspace. These gains and losses are provided in the following costs analysis:

A workspace currency is CDN.

Contract 001 is the only USD contract in the workspace. It is for $10,000 USD.

The defined currency = USD.
The baseline conversion rate (BCRt) = 1.45
The current conversion rate = 1.55.

Three invoices have been paid, while a fourth has been approved for payment, but the check has not been issued yet.

Invoice 01: actual payment amount (APA) = $1,000 USD; actual conversion rate (ACRt) = 1.5704
Invoice 02: APA = $1,000 USD; ACRt = 1.5601
Invoice 03: APA = $500 USD; ACRt = 1.5901
Invoice 04: certified value = $1,000 USD; no ACRt yet (because cheque has not been issued)

The realized currency gains/losses due to exchange rate variation:

Sum of [APA(n) x (ACRt(n) – BCRt))] =

1,000 USD * (1.45 -1.5704)
+ 1,000 USD * (1.45 -1.5601)
+ 500 USD * (1.45-1.5901 ) = -300.55 CDN

The forecast exchange rate gains/losses in CDN:

(10,000USD – (1,000USD + 1,000USD + 500USD) * (1.45 -1.55 ) = -$750 CDN

The total exchange rate gains/losses:

Realized + Forecast = -$1050.55 CDN

Note: Invoice 04 does not affect the results, since it has not been paid yet. Until it is paid, the best guess for its exchange rate is the current conversion rate. As a result, this invoice is not included in the realized exchange rate gain or loss calculation.