Tuesday, 8 April 2014

Be Careful when Selling Assets Denominated in Foreign Currency


 
 
I have often seen that gains and losses on assets denominated in foreign currencies are calculated incorrectly. It is incorrect to calculate the gain or loss  on the sale in foreign currency then translated it to Canadian dollars at the average exchange rate.  What is correct is to arrive at the cost in Canadian dollars at the exchange rate ruling at the time of purchase and then calculate the sales in Canadian dollars by applying the exchange rate ruling at the time of sales to the sales proceeds in foreign currency.  The difference is gain or loss in Canadian dollars. If you don't do this you overstate your gain when Canadian dollar is rising and understate your gain when it is falling.



This blog is for general information only and cannot replace professional advice.
The reader is invited to contact the writer to discuss the contents of the newsletter.
Readers are advised to seek professional advice before acting on the material
in this newsletter

1 comment:

  1. Thanks for sharing a helpful advices with us really helpful to get some good links to the site or blog Awesome!! It’s just what I need!!

    Foreign Coin Currency Exchange

    ReplyDelete